Massimiliano Castelli Philipp Salman

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Key highlights:

  • 2020 turned out to be better than expected for risk assets, with the portfolios of central banks and sovereign wealth funds ending in positive territory. Diversification across asset classes and countries – once again – paid off.
  • 2021 is set to be a year of choice for sovereign institutions. As interest rates remain low and the global economy recovers from the pandemic, several key decisions will have to be taken by central banks and sovereign wealth funds to meet the expectations of sponsors in the long run.
  • Some of the secular trends going on before the pandemic– low interest rates, de-globalization, digitization and climate change – remain intact. Investors should embrace these trends, adjusting their allocations accordingly via better diversification across countries, sectors and companies.

The approval of effective vaccines in December 2020 paves the way for a gradual normalization in social mobility and a strong recovery. But is your asset allocation ready to embrace the new year?

We believe 2021 will create a positive environment for risky assets, with equities set to deliver further gains. But what else is in store for sovereign investors?

Read our Sovereign Investment Outlook to find out why we believe 2021 will be the year of choices and why the right asset allocation will be key to meeting the challenge of an ongoing low yield environment.

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