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Bearish indicators emerge for 2023

Bonds are in and equities out as fund firms position for the new year
December 15, 2022
  • Asset managers are taking a wait-and-see approach when it comes to bargain hunting
  • Risk is off the table – for now

The story of 2022 has been a perplexing one across many a sector and asset class. Plenty of funds and securities have started to look cheap or at least cheaper â€“ bond yields have reached their highest point in years, share price discounts on investment trusts have ballooned and many darlings of the stock market have endured double-digit falls. But there’s a convincing argument that this simply prices in the many challenges and many unknowns facing investors – from the prospect of a lengthy recession to the arrival of higher inflation and higher interest rates.

This stance is reflected clearly enough in many of the annual outlooks we have examined for this article. Our latest half-yearly parsing of fund manager forecasts and asset allocation views suggests that several expect more bad news to come – but with the prospect of light at the end of the tunnel, possibly later on in 2023. For now there is certainly a hesitation to pile back into the likes of equities, while bonds are attracting more interest.

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