16 December 2022
Christopher Lewis, Head of Investment at Cazenove Capital, shares our economic outlook and investment strategy for 2023.
In this short video Christopher delivers his views on the global economy, inflation, interest rates, corporate earnings and energy prices. He also explains how this will impact investment strategy across equities, fixed income, alternatives and cash.
Christopher Lewis, Head of Investment Strategy, Cazenove Capital commented:
"Central bankers may start to sound less anxious about inflation in 2023. But investors must still contend with higher interest rates and a deteriorating economic backdrop as the US and other developed markets fall into recession."
Download the full Outlook for 2023
Economic Outlook:
- Global economy: Our base case is for developed markets to fall into recession in 2023 before rebounding in 2024.
- Inflation: Inflationary pressures could remain elevated in the UK, though we may see US inflation fall faster given greater self-sufficiency in both energy and agriculture.
- Interest rates: In the near term, we expect interest rates to move slightly higher in both the US and UK. However, rate cuts could be on the cards in late 2023 as central banks shift their focus to supporting economic growth.
- Corporate earnings: Analyst expectations remain too optimistic. Earnings and margins could come under pressure as the global economy slows.
- Energy prices: Risks skewed to upside given potential for further supply disruptions. Investment strategy:
- Equity: Remain underweight given elevated near-term uncertainty, with a preference for large-cap, higher-quality companies. Looking for opportunities to increase exposure.
- Fixed income: Neutral fixed income but see increasing opportunity in both corporate and government bonds. A preference for short-dated bonds in the near term, with an eye on extending maturity to increase defensiveness.
- Alternatives: We remain positive on alternatives as diversifying assets and see good longer-term opportunities in areas including real assets and commodities.
- Cash: Maintaining an elevated cash position in the near term to take advantage of tactical opportunities.
ENDS
For further information, please contact:
Estelle Bibby, Head of Marketing and Communications +44 20 7658 3431 estelle.bibby@schroders.com
Laura Keeble, Marketing Manager +44 20 7658 1615 laura.keeble@schroders.com
Note to Editors
About Wealth Management
As a long-established wealth manager with an absolute focus on preserving and growing our clients’ wealth, what matters most to our clients, matters most to us.
Private individuals, family offices, trusts, institutions and charities all rely on us to benefit from bespoke wealth management services. Skilled in investment management, wealth planning and banking services – we also offer discretionary fund management to external advisers and their clients, and we are the largest charity fund manager by assets under management in the UK.
For two centuries we have helped clients look forward to a successful future. With each client, we plan for the long term and will always seek a detailed understanding of their unique circumstances, goals and ambitions. Most of our clients, and many of our own people, work with us for years, decades and even generations. This creates relationships of unusual depth.
Our experience of navigating complex markets and adapting to change helps us balance risk and reward. The investment expertise we call upon as part of Schroders, a truly global asset manager, combined with our long-standing experience of advising clients, is what sets us apart.
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Cazenove Capital: UK and Channel Islands. Schroders Wealth Management: Singapore, and Switzerland.
Schroders Wealth Management, including Cazenove Capital, has £109.4 billion in assets under management globally across all Wealth Management offices (including Benchmark Capital, part of wealth management) as at 30 June 2022.
Further information about Cazenove Capital can be found at www.cazenovecapital.com.
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