Investors are shifting their focus to portfolio balance in the wake of an unprecedented ‘perfect storm’ of economic shocks, according to Invesco.
According to the investment management firm, the shift is towards allocations to cash, gold, and bonds for safety following a raft of crises, including a major European conflict, a pandemic, a global trade war, Brexit, and major financial crises in the US and the Eurozone.
These factors have led to competing dynamics of high inflation and low-interest rates, and supply shocks, wars, and revolutions in commodity producers have caused “stagflation”.
The entire global economy, markets, and peacetime international system are under assault, it said.
Invesco’s most recent analysis showed the threat of global stagflation, with double-digit inflation slowing growth and the risk of rising unemployment in many world markets.
The impact on corporate debt, exports, and currencies could vary from country to country.
A diversified portfolio – including fixed-income – could help weather the uncertainty better than a heavy shift into cash or gold,” Invesco said.