Late-cycle investment opportunities entail
balancing risk and reward
As the economic expansion and the second-longest bull market
continue to evolve, Wells Fargo Investment Institute (WFII) today
released the 2018 Outlook report ‘Moving Ahead in an Aging
Recovery.’ The report notes that the global expansion is maturing
but isn’t over yet, and that investors should be more selective in
asset selection and incorporate active management strategies into
portfolios.
“Investors should stay anchored in their goals, as investment
return trends typically ebb and flow over an economic expansion,”
said Darrell Cronk, President of Wells Fargo Investment Institute
and Chief Investment Officer of Wells Fargo Wealth and Investment
Management. “While investment return is a priority for investors,
we are at a point in the cycle when it’s particularly important to
seek ways to reduce unnecessary portfolio risks, which is best
accomplished through a diverse portfolio. We believe the primary
portfolio challenge for 2018 will be to assess risk and reward more
diligently as investors look for late-cycle opportunities.”
Investors are invited to learn more about WFII’s 2018 Outlook by
joining Paul Christopher, Head of Global Market Strategy for WFII,
and other strategists for a conference call on December 7, 2017, at
4:00 p.m. ET. Participants should dial 1-855-723-6393 and enter
conference ID 7574039.
Investors can also download the 2018 Outlook: ‘Moving Ahead in
an Aging Recovery’ for an in-depth analysis of the 2018 economic
and market forecasts, with emphasis on the global economy,
equities, fixed income, real assets, alternative investments,
portfolio implementation actions, and focus themes.
The report outlines five actions that may make a difference for
investors’ portfolios:
- Stress-test strategies against
historical events.
- Seek alpha (excess return over the
benchmark) through active strategies.
- Stay flexible when assets are
mispriced.
- Hold an appropriate level of cash
alternatives.
- Keep your eyes on the goal.
The 2018 report also introduces and details four focus themes
for investors:
- Balancing risk and reward:
Examines risks investors are facing at this stage of the economic
cycle, how emotions influence behavior during market fluctuations,
and how diversification can help mitigate risks.
- Investing late in a bull market:
Looks at how close we think we are to the end of this equity bull
market, how asset classes perform late in the cycle, and how
performance shifts when an equity bear market occurs.
- Tomorrow’s technology: Addresses
how technology influences businesses and economic sectors, the
impact robotics and automation will have on the labor force and
productivity; and the role cybersecurity plays in the adoption of
innovative technologies.
- The new approach to retirement:
Answers how baby boomers are approaching retirement differently
than past generations, how the next generation is planning for
retirement, and steps investors should take to prepare for their
own retirement.
View the digital presentation of the 2018 Outlook: ‘Moving Ahead
in an Aging Recovery.’
Watch a video with WFII strategists on what the biggest
investment story of 2017 was, and what investors should keep an eye
on and what would be a big surprise in 2018.
About Wells Fargo Investment Institute
Wells Fargo Investment Institute (WFII) is a registered
investment adviser and wholly-owned subsidiary of Wells Fargo &
Company, providing investment research, strategy, manager research
and thought leadership within the Wealth and Investment Management
(WIM) division, with the goal of supplying world class advice to
the company’s financial and wealth advisers. WFII provides
investment advice to Wells Fargo Bank, N.A., Wells Fargo Advisors
and other Wells Fargo affiliates.
WIM is one of the largest wealth managers in the U.S., with $1.9
trillion in client assets. WIM includes Wells Fargo Private Bank,
serving high-net-worth individuals and families; Wells Fargo
Advisors, the third-largest brokerage firm in the U.S.; Wells Fargo
Retirement, which manages $330 billion in employer-sponsored
retirement plan assets for 3.9 million Americans; and Abbot
Downing, serving ultra-high-net-worth individuals and families.
Wells Fargo Advisors is the trade name used by two separate
registered broker-dealers: Wells Fargo Advisors, LLC, and Wells
Fargo Advisors Financial Network, LLC, Members SIPC, non-bank
affiliates of Wells Fargo & Company.
About Wells Fargo & Company (Twitter @WellsFargo)
Wells Fargo & Company (NYSE: WFC) is a diversified,
community-based financial services company with $1.9 trillion in
assets. Wells Fargo’s vision is to satisfy our customers’ financial
needs and help them succeed financially. Founded in 1852 and
headquartered in San Francisco, Wells Fargo provides banking,
insurance, investments, mortgage, and consumer and commercial
finance through more than 8,400 locations, 13,000 ATMs, the
internet (wellsfargo.com) and mobile banking, and has offices in 42
countries and territories to support customers who conduct business
in the global economy. With approximately 268,000 team members,
Wells Fargo serves one in three households in the United States.
Wells Fargo & Company was ranked No. 25 on Fortune’s 2017
rankings of America’s largest corporations. News, insights and
perspectives from Wells Fargo are also available at Wells Fargo
Stories.
Risk Factors
Stock markets, especially foreign markets, are volatile. Stock
values may fluctuate in response to general economic and market
conditions, the prospects of individual companies, and industry
sectors. Bonds are subject to market, interest rate, price,
credit/default, liquidity, inflation and other risks. Prices tend
to be inversely affected by changes in interest rates. The
commodities markets are considered speculative, carry substantial
risks, and have experienced periods of extreme volatility.
Investing in a volatile and uncertain commodities market may cause
a portfolio to rapidly increase or decrease in value which may
result in greater share price volatility. Real estate has special
risks including the possible illiquidity of underlying properties,
credit risk, interest rate fluctuations and the impact of varied
economic conditions.
Alternative investments carry specific investor qualifications
which can include high income and net-worth requirements as well as
relatively high investment minimums. They are complex investment
vehicles which generally have high costs and substantial risks. The
high expenses often associated with these investments must be
offset by trading profits and other income. They tend to be more
volatile than other types of investments and present an increased
risk of investment loss. There may also be a lack of transparency
as to the underlying assets. Other risks may apply as well,
depending on the specific investment product.
General Disclosures
Wells Fargo Investment Institute, Inc. is a registered
investment adviser and wholly-owned subsidiary of Wells Fargo &
Company.
The information was prepared by WFII. Opinions represent WFII’s
opinion as of the date of this report and are for general
information purposes only and are not intended to predict or
guarantee the future performance of any individual security, market
sector or the markets generally. WFII does not undertake to advise
you of any change in its opinions or the information contained in
this report. Wells Fargo & Company affiliates may issue reports
or have opinions that are inconsistent with, and reach different
conclusions from, this report.
The information contained herein constitutes general information
and is not directed to, designed for, or individually tailored to,
any particular investor or potential investor. This report is not
intended to be a client-specific suitability analysis or
recommendation, an offer to participate in any investment, or a
recommendation to buy, hold or sell securities. Do not use this
report as the sole basis for investment decisions. Do not select an
asset class or investment product based on performance alone.
Consider all relevant information, including your existing
portfolio, investment objectives, risk tolerance, liquidity needs
and investment time horizon.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171206005285/en/
Allison Chin-Leong,
212-214-6674allison.chin-leong@wellsfargo.comorKelly Reilly,
314-797-9701kelly.reilly@wellsfargo.com
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