Wells Fargo Investment Institute: 2018 Outlook Report ‘Moving Ahead in an Aging Recovery’

Late-cycle investment opportunities entail balancing risk and reward

NEW YORK--()--As the economic expansion and the second-longest bull market continue to evolve, Wells Fargo Investment Institute (WFII) today released the 2018 Outlook report ‘Moving Ahead in an Aging Recovery.’ The report notes that the global expansion is maturing but isn’t over yet, and that investors should be more selective in asset selection and incorporate active management strategies into portfolios.

Investors should stay anchored in their goals, as investment return trends typically ebb and flow over an economic expansion,” said Darrell Cronk, President of Wells Fargo Investment Institute and Chief Investment Officer of Wells Fargo Wealth and Investment Management. “While investment return is a priority for investors, we are at a point in the cycle when it’s particularly important to seek ways to reduce unnecessary portfolio risks, which is best accomplished through a diverse portfolio. We believe the primary portfolio challenge for 2018 will be to assess risk and reward more diligently as investors look for late-cycle opportunities.”

Investors are invited to learn more about WFII’s 2018 Outlook by joining Paul Christopher, Head of Global Market Strategy for WFII, and other strategists for a conference call on December 7, 2017, at 4:00 p.m. ET. Participants should dial 1-855-723-6393 and enter conference ID 7574039.

Investors can also download the 2018 Outlook: ‘Moving Ahead in an Aging Recovery’ for an in-depth analysis of the 2018 economic and market forecasts, with emphasis on the global economy, equities, fixed income, real assets, alternative investments, portfolio implementation actions, and focus themes.

The report outlines five actions that may make a difference for investors’ portfolios:

  1. Stress-test strategies against historical events.
  2. Seek alpha (excess return over the benchmark) through active strategies.
  3. Stay flexible when assets are mispriced.
  4. Hold an appropriate level of cash alternatives.
  5. Keep your eyes on the goal.

The 2018 report also introduces and details four focus themes for investors:

  • Balancing risk and reward: Examines risks investors are facing at this stage of the economic cycle, how emotions influence behavior during market fluctuations, and how diversification can help mitigate risks.
  • Investing late in a bull market: Looks at how close we think we are to the end of this equity bull market, how asset classes perform late in the cycle, and how performance shifts when an equity bear market occurs.
  • Tomorrow’s technology: Addresses how technology influences businesses and economic sectors, the impact robotics and automation will have on the labor force and productivity; and the role cybersecurity plays in the adoption of innovative technologies.
  • The new approach to retirement: Answers how baby boomers are approaching retirement differently than past generations, how the next generation is planning for retirement, and steps investors should take to prepare for their own retirement.

View the digital presentation of the 2018 Outlook: ‘Moving Ahead in an Aging Recovery.’

Watch a video with WFII strategists on what the biggest investment story of 2017 was, and what investors should keep an eye on and what would be a big surprise in 2018.

About Wells Fargo Investment Institute

Wells Fargo Investment Institute (WFII) is a registered investment adviser and wholly-owned subsidiary of Wells Fargo & Company, providing investment research, strategy, manager research and thought leadership within the Wealth and Investment Management (WIM) division, with the goal of supplying world class advice to the company’s financial and wealth advisers. WFII provides investment advice to Wells Fargo Bank, N.A., Wells Fargo Advisors and other Wells Fargo affiliates.

WIM is one of the largest wealth managers in the U.S., with $1.9 trillion in client assets. WIM includes Wells Fargo Private Bank, serving high-net-worth individuals and families; Wells Fargo Advisors, the third-largest brokerage firm in the U.S.; Wells Fargo Retirement, which manages $330 billion in employer-sponsored retirement plan assets for 3.9 million Americans; and Abbot Downing, serving ultra-high-net-worth individuals and families. Wells Fargo Advisors is the trade name used by two separate registered broker-dealers: Wells Fargo Advisors, LLC, and Wells Fargo Advisors Financial Network, LLC, Members SIPC, non-bank affiliates of Wells Fargo & Company.

About Wells Fargo & Company (Twitter @WellsFargo)

Wells Fargo & Company (NYSE: WFC) is a diversified, community-based financial services company with $1.9 trillion in assets. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 8,400 locations, 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 42 countries and territories to support customers who conduct business in the global economy. With approximately 268,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 25 on Fortune’s 2017 rankings of America’s largest corporations. News, insights and perspectives from Wells Fargo are also available at Wells Fargo Stories.

Risk Factors

Stock markets, especially foreign markets, are volatile. Stock values may fluctuate in response to general economic and market conditions, the prospects of individual companies, and industry sectors. Bonds are subject to market, interest rate, price, credit/default, liquidity, inflation and other risks. Prices tend to be inversely affected by changes in interest rates. The commodities markets are considered speculative, carry substantial risks, and have experienced periods of extreme volatility. Investing in a volatile and uncertain commodities market may cause a portfolio to rapidly increase or decrease in value which may result in greater share price volatility. Real estate has special risks including the possible illiquidity of underlying properties, credit risk, interest rate fluctuations and the impact of varied economic conditions.

Alternative investments carry specific investor qualifications which can include high income and net-worth requirements as well as relatively high investment minimums. They are complex investment vehicles which generally have high costs and substantial risks. The high expenses often associated with these investments must be offset by trading profits and other income. They tend to be more volatile than other types of investments and present an increased risk of investment loss. There may also be a lack of transparency as to the underlying assets. Other risks may apply as well, depending on the specific investment product.

General Disclosures

Wells Fargo Investment Institute, Inc. is a registered investment adviser and wholly-owned subsidiary of Wells Fargo & Company.

The information was prepared by WFII. Opinions represent WFII’s opinion as of the date of this report and are for general information purposes only and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally. WFII does not undertake to advise you of any change in its opinions or the information contained in this report. Wells Fargo & Company affiliates may issue reports or have opinions that are inconsistent with, and reach different conclusions from, this report.

The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to, any particular investor or potential investor. This report is not intended to be a client-specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon.

Contacts

Allison Chin-Leong, 212-214-6674
allison.chin-leong@wellsfargo.com
or
Kelly Reilly, 314-797-9701
kelly.reilly@wellsfargo.com

Contacts

Allison Chin-Leong, 212-214-6674
allison.chin-leong@wellsfargo.com
or
Kelly Reilly, 314-797-9701
kelly.reilly@wellsfargo.com