Investment headwinds will “still exceed the tailwinds” in 2021 – but there could be more “major opportunities now than in perhaps the last 10 years” if you know where to look.
This is the bold and, given 2020, perhaps surprisingly optimistic forecast from Nigel Green, chief executive and founder of deVere Group, one of the world’s largest independent financial advisory and fintech organisations.
It comes as investors around the world focus on rebalancing portfolios for 2021, after a year no-one expected.
Mr Green says: “2020 was a year for which nobody had planned.
“This included investors, many of whom were caught spectacularly off-guard by not having properly diversified portfolios, which left them open to untold financial risks.
“Looking ahead to 2021, it is likely that investment headwinds will still exceed the tailwinds – but, I believe, that there are also more major investment opportunities to be had in the next year than perhaps in the last decade.”
‘Headwinds’ are the factors that likely weigh on growth and returns, and ‘tailwinds’ are those that can be expected to boost growth and help drive positive returns.
He continues: “The major long-term headwind from the fallout of 2020 is unemployment, which will hit demand, growth and investment.
“There’s also the roll-out of a mass global vaccination agenda which will be a lengthy process and logistical minefield, plus there are the ‘vaccine sceptic’ concerns to address.
“Meanwhile there are geopolitical issues that could impact on investor returns. These include the significant readjustment that will need to happen following Brexit, U.S.-China trade relations which are likely to become increasingly competitive especially in the tech sector, and the rising border tensions between India and China, amongst others.”
However, despite the significant headwinds, the deVere CEO flags three major investment tailwinds in 2021.
“First, the rollout of the Covid vaccines which means economies can be expected to begin solid recoveries,” he says.
“Second, President-elect Joe Biden will enter office and his administration promises a more predictable approach to trade and foreign affairs – and the markets like certainty.
“And third, it is likely that governments will continue to offer fiscal support packages as their economies recover from the pandemic, offering a ‘floor’ for markets.”
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