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Policy uncertainty argues for a global, selective approach to stocks
Portfolio Manager Julian McManus says a new administration in the U.S. could usher in more volatility for global equity markets in 2025, making it all the more important to focus on corporate fundamentals, such as free cash flow.
21 Nov 2024
1 minute read
1 minute read
Key takeaways:
- The outcome of the U.S. election is likely to usher in new trade and fiscal policies that could increase volatility in global equity markets in 2025.
- The transition could also create opportunities for investors to capitalize on new sources of growth and take advantage of gaps in valuation.
- In our view, a global bottom-up approach to equity investing next year could help investors build a more resilient portfolio amid a period of heightened uncertainty.
IMPORTANT INFORMATION
Equity securities are subject to risks including market risk. Returns will fluctuate in response to issuer, political and economic developments.
Foreign securities are subject to additional risks including currency fluctuations, political and economic uncertainty, increased volatility, lower liquidity and differing financial and information reporting standards, all of which are magnified in emerging markets.
Definitions
Free cash flow (FCF) yield is a financial ratio that measures how much cash flow a company has in case of its liquidation or other obligations by comparing the free cash flow per share with the market price per share and indicates the level of cash flow the company will earn against its share market value.
Idiosyncratic risks are factors that are specific to a particular company and have little or no correlation with market risk.
Price-to-Earnings (P/E) Ratio measures share price compared to earnings per share for a stock or stocks in a portfolio.
Monetary Policy refers to the policies of a central bank, aimed at influencing the level of inflation and growth in an economy. It includes controlling interest rates and the supply of money.
Volatility measures risk using the dispersion of returns for a given investment.
21 Nov 2024
1 minute read
1 minute read
Key takeaways:
- The outcome of the U.S. election is likely to usher in new trade and fiscal policies that could increase volatility in global equity markets in 2025.
- The transition could also create opportunities for investors to capitalize on new sources of growth and take advantage of gaps in valuation.
- In our view, a global bottom-up approach to equity investing next year could help investors build a more resilient portfolio amid a period of heightened uncertainty.