Most equity investors have done quite well over the past dozen years — a period that will go down as one of the longest bull markets in history. Low-interest rates have fuelled growth in sectors such as technology, real estate and consumer goods and helped boost overall corporate earnings.
There were market corrections during this time — mostly recently the pandemic-induced downturn in the spring of 2020 — but they were very short and quickly forgotten by most long-term investors.
“For the most part, the past decade or so has been phenomenal for investors,” says Thane Stenner, an investment advisor and senior portfolio manager with Vancouver-based Stenner Wealth Partners+ of Canaccord Genuity Wealth Management, which works with ultra-wealthy clients across Canada.
Times are about to change, Mr. Stenner warns, and says investors should reset their expectations.
He points to an expected mean reversion — when asset price volatility and historical returns revert to the long-run average over time — especially as interest rates start rising and inflation ticks higher, which can slow economic growth.
The anticipated shift has prompted some of the top global financial firms to forecast a rotation in which asset classes will outperform in the next seven, 10 and 20 years (see table).
“There’s going to be a change in market leadership and investment strategies will need to be adjusted as a result,” Mr. Stenner says.
Private equity and private credit are poised to outperform all other asset classes in the coming decade, forecasters say. Equities will still increase, but the greatest growth is expected to come from global stocks, particularly in Europe.
Investors will need to be strategic to capitalize on the asset class performance shuffle, Mr. Stenner says.
He believes active management strategies, where investors can access alternatives such as private equity and private debt, commodity trading advisors and select global equities, will outperform in the years to come.
“The value of active management, blended with passive strategies, will be more critical than ever as we enter this new chapter in investing.”
Contact Thane Stenner at SWP@CGF.com or call 1 833 STENNER (783 6637). Thane is the host of “Smart Wealth™ with Thane Stenner’, a podcast produced by BNN Bloomberg Brand Studio. Listen here: https://stennerwealthpartners.com/bnnbloombergpodcasts.
Advertising feature produced by Globe Content Studio with Stenner Wealth Partners+ of Canaccord Genuity. The Globe’s editorial department was not involved.