TORONTO, ONTARIO--(Marketwired - Mar 17, 2016) - BMO Global Asset Management today released its third annual Five-Year Outlook report, which examines long-term trends expected to dominate the global economy and markets over the next three to five years. The report helps guide many of the firm's investing strategies and active allocation decisions.
"Our report captures the views expressed at our annual Global Investment Forum, focuses them within a five-year timeframe and sets forth three actionable investment scenarios," said Barry McInerney, Co-CEO, BMO Global Asset Management. "Within the most likely scenario we've identified, we expect global economic growth, which has currently been centered in the U.S., to broaden - particularly to Europe and Japan."
This base case scenario, to which the firm assigns a 60 per cent likelihood of occurring, envisions relatively low energy prices, inflation and interest rates. While the U.S. economy will continue to be a catalyst for global economic growth, Japan, Europe, China and India will contribute as well.
The resulting investment implications are primarily fueled by the premise of a widening global economic recovery and the effects of continued low oil prices. They include an overweighting to equity relative to fixed income and to attractive investing opportunities within emerging markets - especially India and commodity-importing countries.
The upside-surprise scenario, to which the firm assigns a 20 per cent chance of playing out, envisions a situation where policymakers around the globe get nearly everything right, both in the short and intermediate term.
The report states that the resulting investment implications of this scenario are best captured by a full "risk on" asset class exposure, focusing on cyclical sector equities and non-U.S. companies with high, domestically generated revenues - particularly among commodity producers.
The third scenario deals with the possibility that one or more policy errors result in a surprise slowdown in the world's economy. BMO Global Asset Management assigns a 20 per cent likelihood that this scenario will occur. The report notes that, given the number of consequential policies being contemplated and the number of central banks contemplating them, there will be many opportunities for miscues.
Potential investment implications of the downside scenario center on the flight of money to quality and safety. This includes long-dated U.S. treasuries and large-capitalization equities from core European countries - such as Germany and the Netherlands - as well as the U.S.
"This report plays a role in helping coordinate the decisions of our investment teams and informs our clients about how we view the global markets," stated Rajiv Silgardo, Co-CEO, BMO Global Asset Management. "Moreover, this annual document - and the collaborative process by which it is constructed and composed - serves to strengthen the ties among BMO Global Asset Management's investment teams."
To obtain a copy of the report, visit www.bmogam.com/fiveyearoutlook
For more information on BMO Global Asset Management, visit www.bmogam.com
About BMO Global Asset Management
BMO Global Asset Management is a global investment manager delivering service excellence from 27 offices in 17 countries to clients across five continents. Including discretionary and nondiscretionary assets, BMO Global Asset Management had C$304 billion in assets under management as of January 31, 2016.
Our four major investment centres in Toronto, Chicago, London and Hong Kong are complemented by a network of world-class boutique managers strategically located across the globe: BMO Real Estate Partners, LGM Investments, Monegy, Inc., Pyrford International Ltd., and Taplin, Canida & Habacht, LLC. BMO Global Asset Management has operations throughout North America and Europe, as well as in Abu Dhabi, Beijing, Shanghai, Hong Kong, Melbourne and Sydney and is a signatory of the United Nations-supported Principles for Responsible Investment initiative (UNPRI).
BMO Global Asset Management is a part of BMO Financial Group, a highly diversified financial services provider based in North America with total assets of C$699 billion as of January 31, 2016, and close to 47,000 employees.
BMO Global Asset Management is the brand name for various affiliated entities of BMO Financial Group that provide investment management, retirement, and trust and custody services. BMO Global Asset Management comprises BMO Asset Management Inc., BMO Investments Inc., BMO Asset Management Corp. and BMO's specialized investment management firms. Certain of the products and services offered under the brand name, BMO Global Asset Management are designed specifically for various categories of investors in a number of different countries and regions and may not be available to all investors. Products and services are only offered to such investors in those countries and regions in accordance with applicable laws and regulations.
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