A Better Balance of Risks:
2018 Mid-Year Outlook
A Better Balance of Risks
Reading Time: 4:34 minutes
We think the outlook for risk asset returns has improved. Interest rates have risen, equities have sold off and the bar for growth is lower after the recent moderation. We are strategically pro-risk, but continue to emphasize a dynamic approach to investment as volatility re-emerges.
We think three developments since the start of 2018 suggest a better balance of risks:
Economic data has softened this year, lowering the bar for positive news on growth going forward.
Neill Nuttall on the outlook for global growth.
Emerging Markets Equity Strategy
International Equity Strategy
Japan Equity Strategy
US interest rates have adjusted higher and we are less concerned about the near-term potential for rate-driven volatility in other asset classes.
Jonathan Beinner on resetting rate risk.
Emerging Markets Debt Strategy
We think we are too early in the cycle for a shift to a regime of persistently high volatility, despite the increase from extraordinarily low levels in 2017.
Volatility should pick up gradually at this stage in the cycle
3-Month Realized Equity Volatility (%)
Source: Haver Analytics, GSAM. As of March 2018
Hedge Fund Beta Strategy