The past 12 months have been full of surprises - the collapse of Thomas Cook, Germany in recession, three US interest rate cuts and a UK General Election. So what will 2020 have in store for investors?
A turnaround in value stocks, a surge in the gold price and a feast of meat-free investments are just some of the opportunities these fund managers are predicting for the year ahead: We asked these fund managers for their predictions for the year ahead:
Companies Not Embracing Tech Will Be Left Behind
Christopher Smart, chief global strategist at Barings, says:
“Many of the biggest opportunities heading into 2020 revolve around technology. We are on the cusp of some very disruptive changes from the Internet of Things. Specifically, we are seeing a convergence of forces around cloud technology, cloud storage, inexpensive sensor technology, mobile networks and data analysis. Advancements in these areas have allowed us to monitor and manage the physical world in ways we never imagined, even 20 years ago. From less downtime for airlines to more productivity on oil rigs, these growing capabilities have created opportunities for businesses across the economy and companies that are not seriously considering how to take advantage of these technologies are likely to be disrupted by competitors who can.”
Emerging Markets Will Thrive
Kim Catechis, head of investment strategy at Martin Currie, says:
"Emerging markets such as Russia, South Africa and Turkey are likely to see an uptick in growth in 2020 – a welcome rebound after years of subdued growth in these countries. In Asia, sectors such as healthcare, education and clean energy will be sources of strength, while China will remain one of the highest-growth economies in the world, particularly as it continues to attract increasing interest from global investors. India is introducing far-reaching labour reform policies, which could be attractive for global manufacturers as well as reducing costs for local manufacturers, while Brazil looks well-placed to drive through pension reforms, a keystone in building future confidence in the country’s public finances.
Climate Change Will Create Opportunities
Nick Langley, senior portfolio manager at RARE Infrastructure, says:
"Significant amounts of money are being spent to mitigate the effects of climate change and to adapt networks. We need infrastructure to cope with more volatile climatic events (ice storms and wildfires), to increase the efficiency of infrastructure (development of electricity storage), and reduce wastage (leaking pipes in water networks). All this is driving near-record growth across the sector as regulators continue to approve projects.
"Infrastructure will likely continue to be in the headlines for all the right (and wrong) reasons. Global initiatives to reduce carbon emissions are resulting in local actions to support the continued development of renewable energy and drive toward greater electrification in the future. We expect infrastructure to be the centrepiece of several governments’ desires to stimulate their economies while in the US, the election campaign will likely see green infrastructure programmes gain momentum."
Unloved Stocks Will Bounce Back
Richard Parfect, fund manager at Seneca Investment Management, says:
"UltraElectronics is just one example of a previously unloved stock – it had some issues in the past but enjoyed a strong rebound and was up 59% in the year to December. The company brought in a new chief executive, adopted a new management style and addressed its legacy problems – now it has a strong order book, good organic revenue growth and improvements which should continue well into 2020.
"I expect to find more turnaround stories in 2020; we have heard repeated tales of the death of the retail sector but we believe, rather than dying, the industry is simply in the midst of a transformation. Traditional retail giants do not have a 'right' to survive, they must adapt to the online shopping revolution and location and product offering are absolutely key. But once Brexit is out of the way, we could see a long overdue resurgence for value stocks and investors with a discerning eye will be able to spot the real diamonds in the rough."
Gold Will Shine as Inflation Rises
Ned Naylor-Leyland, manager of the Merian Gold & Silver Fund, says:
“When you look at a tub of Quality Street from directly above, very little has changed over the years. Equally true is that when you look at top line inflation, it has drifted sideways, optically uninteresting. But in both cases, what is happening under the hood is a different story. It takes four 2019 boxes of chocolates to fill one tin from the 80s. So if you think that next year your cost of living won’t be higher still, or that there will be as many chocolates in the box for the same price, I would argue you are just hypnotised by the statisticians subjective 'constant level of satisfaction'.
"The shrinkflation of both consumer goods and core inflation statistics is a trend that is sure to continue. The removal of gold from the monetary system in 1971 started this chocolate thrifting and statistical manipulation, which is also why gold is your hedge against it. The likelihood of yet more central bank accommodation and loose monetary policy in 2020 guarantees that its relentless effects on your shopping trolley are here to stay."
More Meat-free Investment Opportunities
Stephane Soussan, manager of the Food for Generations Fund at CPR Asset Management, says:
"The global meat market is being re-packaged. The costly, unsustainable and ethically questionable characteristics of animal farming are fuelling rapid growth in the market for meat substitutes and we can expect to see a number of key developments in this market to unfold in 2020 and beyond. In the year ahead we will see new meat substitutes that are cheaper, more realistic, less processed and containing fewer chemical additives and, while consumer tastes can be hard to shift, I think these products will gain traction. While Beyond Meat is the currently the only pure way to access this trend, I think more opportunities will arise as new companies and products come to market."
Global Economies Will Rebound
Matteo Germano, head of multi-asset at Amundi, says:
“Global economic conditions are weak but there are some signs of stabilisation and we expect a mild rebound next year. Emerging markets in particularly are likely to remain resilient and widen the growth gap with developed economies in the second part of the year.”