We have never been through a cycle where equities have been driven by central banks. 2018 is the year when that influence is reduced, either through scaling back asset purchases in the case of the ECB, or no longer reinvesting assets for the Federal Reserve.
Looking back over our last three annual real estate outlooks, the messages have not changed too much.
2017 will go down as another year for good returns across fixed income. The cries for a correction in bonds fell on deaf ears again, and, as we turn the page on the year, yields across fixed income asset classes are mostly lower than where they started. There is no doubt that those cries will reverberate again in 2018.
2017 was a vintage year for global equity markets, with indices delivering strong double-digit returns in dollar terms. Markets have heavily discounted future earnings growth and some stocks have been pushed up to lofty valuations.
Asian high yield bonds performed strongly in 2017. In 2018, I will continue to focus on bottom-up security selection, with a bias towards high quality issuers and liquid holdings, and a focus on income. An issuer and sector constrained approach remains key to ensuring diversification and managing volatility.