In the September edition of Wealth Features, we present a round-up of the latest research and analysis from Barclays Wealth and Investment Management.

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The return of monetary normalisation across some developed markets may spark a more volatile environment for equity and fixed income markets in the months ahead, despite encouraging signs of sustainable growth, particularly in the US and UK.

In the US, uncertainty about the Federal Reserve’s (Fed) next moves continues to make investors nervous, although, at this stage, we don’t believe the Fed will consider increasing interest rates until the second half of 2015.

Generally speaking the US economy appears to be in good health, and investors will have been pleased by the recent surge in M&A deal activity which indicates that growth and risk appetite are forcing themselves back onto the agenda. We are seeing the strongest signals yet that the world’s largest economy has finally shaken off the shackles of recession.

Meanwhile in China – an economy which is now larger in some measures of output than the US – private sector debt is high and still rising. There are undoubtedly areas of concern, but it would appear that the country’s policy makers are making the right decisions when it counts.

A broader look at Asia leads us to think that Asian equities could hold some value for investors - China offers an interesting opportunity for those with a bigger risk appetite, although we have had a tactical preference for a while now for the more developed stocks of Taiwan and Korea.

Where Asia and the US are presenting investors with encouraging signs, the same cannot be said for the eurozone. Growth remains sluggish and unpredictable, spurring the European Central Bank (ECB) into action. At its September meeting the policy committee voted to cut refinancing and deposit rates in a bid to stimulate the economy. The lingering conflict between Ukraine and Russia and geopolitical difficulties in the Middle East, have further hindered any recovery.

The success of direct intervention in the US and Japan – where so-called ‘Abenomics’ appears to be having some success – suggests the ECB may find value in being more proactive.

Overall, the global economy is growing, but there remain a number of pitfalls which investors need to be wary of, so we would advocate adopting a long-term strategy which favours portfolio diversification.

For more information about any of our research and in-depth analysis of the latest macroeconomic trends, please do visit our Research Centre. Below you will find a selection of articles from the Research Centre, which we hope you find both interesting and valuable. If you have any questions, please don’t hesitate to contact your Private Banker.

In Focus: Economic hegemony

Growth in Asia over recent years has led to some suggestions that China, rather than the US, might be a better place for investors to look if they want clues about the future direction of the global economy. But with the US economy seemingly in better health and posting encouraging growth signals, is it too early to abandon the world’s largest economy in favour of its challenger in the East?

In Focus: China update

In the last five years, only Ireland and Spain have managed to grow their debt piles as quickly as China. Some investors are weary about the resilience of Asia’s largest economy and although significant risks exist, China’s policy makers appear to be making the right decisions. Discover where we feel the opportunities and pitfalls may lie.

Volatility Part I: The calm before the storm? [PDF, 697KB]

William Hobbs and Antonia Silcock from our Global Investment and Solutions team, take a closer look at volatility and its impact on equities and fixed income. Read why they believe diversification is more important than ever. Read the full report [PDF, 697KB].

Volatility Part II: Becalmed in a teacup [PDF, 697KB]

Greg B Davies, our Head of Behavioural Finance, explains why there may be more to understanding volatility than meets the eye. For long term investors, he argues that it is the fear of volatility, rather than the volatility itself, which matters most to returns. Find out why [PDF, 697KB].

Investment roundtable [PDF, 926KB]

The latest panel discussion was hosted by James Thomson from our Discretionary team, and brought together four portfolio managers to discuss second quarter performance. Learn their thoughts on whether markets have reached the tipping point between confidence and complacency [PDF, 926KB].

Active bond investing [PDF, 926KB]

In an era of historically low interest rates and yields, today’s credit market makes for a challenging environment. In this report, we look at how our fixed income managers are adapting to this – there may be complexity and uncertainty, but are there still opportunities to be found? Read more here [PDF, 926KB].

Contact us

If you have questions relating to the articles, please contact your Private Banker.