Panorama: Mid-Year 2017

The reflation debate

Is the global reflation investment theme over? Senior members of AM's investment teams across both traditional and alternative asset classes wade into the debate.

We asked our contributors to identify the risks and opportunities in their respective investment universes in the context of what we see as the three key drivers of markets in the remainder of 2017 and beyond:

  1. The theme of reflation
  2. The extent to which monetary policy changes have already been priced in by the markets
  3. Geopolitical developments globally

In aggregate, the responses highlight the diversity of views around the US growth and inflation narrative— suggesting that market dispersion and therefore the opportunity set for high conviction active managers to generate alpha is likely to stay high. The most strident message regards the high level of economic, policy and geopolitical uncertainty globally. For markets this may well mean more frequent and more severe bouts of risk aversion than has been the case for most of the post-financial crisis period. But for high conviction active managers, it also means the strongest potential opportunity set for a decade.

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