60 seconds with Marcus Brookes on 2017's challenges

In this video, Marcus Brookes looks back on what drove markets in 2016 and why next year could be different.


Marcus Brookes

Marcus Brookes

Head of Multi-Manager

Investors made good returns in 2016

When investors come to review their returns for 2016, I think they’re going to be quite happy.

The returns generated from the equity market – developed markets as well as emerging markets - will actually be pretty good, in fact, double digits in all markets.

When they look at the returns from the bond markets, typically the safer part of their portfolio, they will also look pretty good. A little bit weak more recently, but still very good returns for 2016.

So, where have these returns come from? Is it that we had better profits growth from companies? Well, actually, no – there was some disappointment over the course of 2016.

Is it that we had better-than-expected economic growth? In fact, that’s not true either – economic growth looks like it’s going to come in somewhere near consensus was at the beginning of the year. So, where have these returns been generated?

Returns boosted by end of austerity

Well, our feeling is that this might be due to the end of a programme known as austerity. The vote in the UK for Brexit has brought in a different government with a different view on spending. Rather than having the austerity of George Osborne we now have Mr Hammond’s fiscal easing, although it’s only small.

Again, in America, we’ve seen the end of Barack Obama’s austerity programmes and the bringing in of Mr Trump who is planning on spending a lot of money.

So, the returns we’re seeing today are possibly all about the growth for the future.

Now, as we look at 2017, there’s an awful lot more politics coming and possibly some more changes of government.

However it’s less likely, particularly in Europe, that they will have the same ability to spend more money, so perhaps returns will be slightly more difficult for 2017.