Pictet AM Smarts
Welcome back to Pictet AM Smarts, our regular roundup of articles analysing the trends shaping the economy, markets and society. In this month's newsletter, our experts shine a light on trends and asset class return projections for the next 5 years, direct lending in Europe, and how investors can measure their impact on nature and drive change. Happy reading!
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1. Secular Outlook: our five-year return forecasts
Our strategy team expects the MSCI World Index to deliver annualised real returns of only half the historical norm over the next five years. Generating a more respectable long-term average real return of 5% may require investors to look beyond traditional balanced portfolios. Read our?Secular Outlook for our return projections and the trends investors can’t ignore.
2. European private debt has the edge in uncertain economic times
For asset managers providing private loans, the current economic climate means less competition from banks, the ability to select from companies with strong balance sheets, and high yields (right now more than 12% compared to 7% last year).?In our five-year forecasts, our strategy unit highlights private debt as a promising investment opportunity with average returns in high single digits.
3. Breaking nature’s code: measuring impact and driving change
A number of initiatives are underway to help businesses and investors measure how their activity affects nature, and in turn, how biodiversity loss affects their prospects. We look at the recent advancements and share the tools our own thematic equity teams use to integrate biodiversity considerations into investment strategies.
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Our approach includes engaging with the management of companies we invest in to steer?behaviour towards more sustainable practices, and ultimately create long-term value for our investors. An investment manager from the Positive Change team, Peter Rawlence, explains what guides his engagement decisions with a case study.
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4. From the megatrends lab
This month our mega experts look at the promising advances in the treatment against cancer , a market forecast to rise to USD377bn by 2027 according to IQVIA. We explore the controversial rise of e-fuels which are regarded in policy circles as a possible alternative to battery power for a new generation of green cars. Environmental activist George Monbiot discusses the large footprint of the meat and dairy industry and suggests bacteria could save our bacon and eggs .
Some more reading:
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