InPerspective - Volume 1

2010 proved to be a strong year for equity markets, with gains in the final quarter confirming attractive returns for the year as a whole. Meanwhile, the higher-quality sovereign bond markets lost ground in the closing months of 2010, but posted solid returns over the 12-month period nonetheless. Towards the end of the year, unease about government finances resurfaced in the periphery of Europe, investors were troubled by disagreement among the G20 nations about how to resolve persistent challenges in the aftermath of the credit crisis, and currency 'wars' continued to create economic and financial-market distortions. However, such factors were distractions from, rather than impediments to, the strength of real asset markets, with the actions of policymakers, particularly in the US, providing significant countervailing solace to investors in those markets.

In this edition of inPerspective, we discuss the complex backdrop to economic and financial-market activity, we consider the principal themes that we think dominate the outlook for investors in 2011 - all change, fire risks and global realignment - and we explore the likely implications of those themes for bond, equity and currency markets. In our second article, we focus upon our Global Opportunities strategy, which takes an unconstrained and concentrated approach to investment in global equities and has the flexibility to invest without geographic or sector constraints.