Wealth DFM 6 | Are we heading for recession? | May/June 2023

by Becky Oliver

Recession: are we there yet?

Whilst the answer to that question is no – technically – it’s still a good question to ask as it’s one which has plagued wealth managers, economists, policy makers and politicians for many months. And it looks set to do so for many more too.

Of course, the technical definition of recession – two consecutive quarters of negative growth – is one thing. Whilst the UK, US, EU and other major markets have managed to avoid recession so far this year, the fact that global growth remains under serious pressure and there are so many other significant headwinds in play too, is all causing many a headache for asset managers.

The latest ‘permacrisis’?

The Collins English Dictionary declared “permacrisis” to be their word of the year for 2022. But what is it exactly and is it extending into 2023? I thought I’d look up the definition. So, according to Collins, it’s “an extended period of instability and insecurity, especially one resulting from a series of catastrophic events. That seems to me to sum up rather well where we are at the moment.

We’ve seen the fastest base rate hikes for 40 years, inflation levels also not seen since the 1980s, an energy crisis, cost of living crisis, all on the back of war in Ukraine – oh, and let’s not forget the pandemic.

The recent stresses on the banking system which began in the US, extended to Europe with the UBS takeover of sickly Credit Suisse have only added to this. Not only is the banking crisis expected to limit Central Bank rate hikes, but the US, UK and EU economies appear to be weakening overall.

The US, EU and UK may not. be in a recession as I write this, but things aren’t exactly looking great.
Many investment managers are cautious in terms of asset allocation and a strong focus on risk management is understandable.

Who’s doing what?

That’s why, in this edition of IFA Magazine we’re sharing the views of a number of asset managers, highlighting their views on what’s going, how they’re positioning portfolios and why. One thing you can’t fail to notice, is that, after last year’s bond rout, many investment managers are finding real value in the fixed income sectors. As you peruse the following pages, the views of both PIMCO and Ninety One will, hopefully, be of particular interest.

In the meantime, please remember to check in with us regularly on www.wealthDFM.com and our sister title www.IFAMagazine.com for news and views. With so much going on, there’s rarely been a more important time to keep up with the latest thinking.

Sue Whitbread
Editor | Wealth DFM

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