Through in-depth analysis, an understanding of market behavior, and wise strategies, Citi Private Bank’s Mid-year Outlook answers our clients’ most frequently asked question these days: ‘What do I do now?’
Failing to follow an established long-term plan is one of the main reasons why families can drift below the world’s wealthiest over time. To help keep your portfolio aligned to your recommended allocation and to our investment themes, we can provide you a detailed report showing how your portfolio compares to key benchmarks. Your relationship team can then recommend ways for you to address any issues identified. To request your report, please reach out to your Banker or Investment Counselor.
*Source: Citi Private Bank Global Investment Lab, as of 23 May 2018. Recommended allocation is the reference allocation that reflects our understanding of a client’s investment objectives and risk tolerance.
David Bailin Global Head of Investments, Citi Private Bank
In every way, 2018 looks like a very different year than 2017. Last year saw 75% of the calmest days in markets for the previous ten years. In 2018 so far, we have experienced three corrections, and a surge in volatility across equities, fixed income, and currencies. The average ‘down-day’ for equities in 2018 is 24% larger than the average ‘up-day’. So, what is the root cause of this sea-change in market conditions? Is it the prospect of trade wars? Potential political meltdown in Italy? Fed tightening in the US? Changes in geopolitics from Iran to Russia to US-European relations? Elections in Mexico? President Trump’s unpredictability?
At times such as these, the job of a trusted advisor is to look beyond the headlines and focus on three critical factors. The first is the data. Our Mid-year Outlook presents hard data that defines global growth prospects by region, country, and industry to determine where we are and where we are likely to be from 2018-2019. The second is history. We present information on the behavior of markets to explain what is likelier to happen if the world economy performs as we expect. And the third is strategy. We know that global diversification, consistency of portfolio implementation, and the right selection of investment opportunities are most critical.
Through in-depth analysis, an understanding of market behavior, and wise strategies, Citi Private Bank’s Mid-year Outlook answers our clients’ most frequently asked question these days: ‘What do I do now?’
We believe that the resilience of global markets is greater than many expect. We see corporate earnings continuing to grow and global growth slowing a bit, but not to recessionary levels. We see equity valuations coming down as interest rates rise, consistent with previous similar market cycles. And we also think that portfolios need to adjust to address the concerns we see, from politics to debt levels to currencies.
Most importantly, as we meet with families across the world, we frequently see highly inefficient portfolios, saddled with severe concentration risk in single assets and single currencies.
Often, investors have not looked sufficiently at their options to diversify adequately and add liquidity. We aim to provide advice and long-term strategies to address these issues.
Our Mid-year Outlook 2018 advice is clear and thorough. And our recommendations are designed to help you preserve the value of your portfolio and potentially to profit even amidst uncertainty. We highlight that while the reasons behind today’s volatility in markets are of the moment, the way that markets respond to local and regional issues is typical.
A globally diversified, high quality investment portfolio has never been more important to countering uncertainty. Your Investment Counselor and Private Banker stand ready to discuss how you might implement our ideas in your portfolio. I look forward to speaking with you in person, either at one of our Mid-year Outlook events or thereafter.
