There are plenty of changes on tap for the 2017 investment horizon, not the least of which is a new business and investment-minded president in office. In its investment outlook for 2017, J.P. Morgan reports that the slow economic growth trend of the last eight years could get a turbo charge by President Trump’s plans for fiscal policy.1
The U.S. economy currently is in the fourth-longest period of economic expansion since 1900. However, one reason this period has lasted so long is because the rate of growth has been slow, averaging only 2.1 percent a year. With the unemployment rate now below 5 percent, J.P. Morgan likens this expansion to the slow but steady gait of a tortoise, which, as you may recall, wins the race against the hare.2
For some people, the recovery has been too little and too late. Others have had the resources to invest in a steadily gaining stock market over the same time frame. However, most people land somewhere in the middle, still plugging away — working, saving and investing — perhaps with reinvigorated hope for 2017. Remember that we are here to review your progress and help you work toward your long-term financial goals using a variety of investment and insurance products.
Among the changes in the investing marketplace is the ever-influential millennial generation, which comprises individuals born between 1980 and 2000. Some analysts believe this demographic could drive performance in certain sectors of the market, particularly socially conscious investments. Coming of age during recessionary times, young adults also are cost conscious about investment fees and the need for transparency, and they insist on digital and mobile access to financial information and their accounts.3
Speaking of socially conscious investments, “impact investing,” which combines environmental and corporate responsibility for a measurable social impact, is on the radar for more money managers this year. Even some hedge fund managers are integrating social finance into their investment mix to broaden their appeal.4
According to Raymond James, global trade looks to be the biggest potential disruptor of 2017. With worldwide protectionist strategies at play, advocated by President Trump and many Americans, renegotiated trade agreements could pose a risk for disrupting supply chains for U.S. manufacturers and raise the price of imports. 5
BNP Paribas Wealth Management expects the president’s new investments in American infrastructure and select tax cuts to provide economic stimulus both here and abroad. Jobs should increase, which would likely push up both wages and inflation.6
Wage growth is particularly important in light of the number of Americans behind on retirement savings.7 As more Americans dip into the investment market, index funds, which currently account for nearly one-third of all assets under management in the U.S., should continue their popularity. With more investors in the market, there will likely be greater demand for electronic access to financial information, simpler investment offerings and a higher level of transparency regarding account and management fees.8
1 J.P. Morgan Asset Management. Nov. 30, 2016. “The investment outlook for 2017: Economic warming and political warnings.” https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/market-bulletin-2017-outlook. Accessed Jan. 10, 2017.
3 Deloitte. 2017. “Investment Management Outlook 2017.” https://www2.deloitte.com/us/en/pages/financial-services/articles/investment-management-industry-outlook.html. Accessed Jan. 10, 2017.
4 Deloitte. 2017. “Impact investing and hedge funds: A sustainable strategy.” https://www2.deloitte.com/us/en/pages/financial-services/articles/impact-investments-hedge-funds-esg-business.html. Accessed Jan. 10, 2017.
5 Raymond James. Jan. 4, 2017. “2017 Outlook: Opportunity and Uncertainty.” http://www.raymondjames.com/pointofview/2017-outlook-opportunity-and-uncertainty?utm_source=hearsay&utm_campaign=investment%20strategy&utm_medium=social&utm_content=article. Accessed Jan. 10, 2017.
6 BNP Paribas. 2016. “2017 Investment Themes.” https://wealthmanagement.bnpparibas/content/dam/bnpparibas/pdfs/investments-themes-2017/2017_Themes_client_version_EN_28_12.pdf. Accessed Jan. 10, 2017.
7 Elyssa Kirkham. Money. March 14, 2016. “1 in 3 Americans Has Saved $0 for Retirement.” http://time.com/money/4258451/retirement-savings-survey/. Accessed Feb. 24, 2017.
8 Jeroen van Oerle and Patrick Lemmens. Robeco. April 2016. “The future of asset management.” https://www.robeco.com/images/201604-the-future-of-asset-management.pdf. Accessed Jan. 10, 2017.
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