BlackRock is an American multinational investment management corporation. It is the world's largest asset manager, with over $10 trillion in assets under management.
BlackRock offers a range of investment and technology services, including mutual funds, exchange-traded funds (ETFs), and advisory services for institutional and individual investors.
It also provides risk management, investment system outsourcing, and other services to a broad base of clients, including pension funds, endowments, foundations, and financial institutions.
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The period of stable economic activity and low inflation known as 'The Great Moderation' has ended.
This has resulted in increased market volatility and a predicted recession, causing central banks to tighten policy to control inflation.
As a result, developed market equities are being tactically underweighted. While a more positive outlook for risk assets is anticipated in 2023, sustained bull markets are not expected. A new investment strategy is required to navigate this changing environment.
BlackRock's experts believe that the period of stability in the economy known as the Great Moderation is over, and we are now in a new era of macro and market volatility.
They predict a recession and central banks overtightening policy to tame inflation.
As a result, BlackRock is tactically underweight developed market equities, and they expect to become more positive on risk assets at some point in 2023. However, they don't anticipate sustained bull markets of the past and believe a new investment playbook is needed.
BlackRock's themes for 2023 are pricing the damage, rethinking bonds, and living with inflation.
They also advise taking more granular views and more frequent portfolio changes to navigate the new regime.
BlackRock's themes for 2023 are pricing the damage, rethinking bonds, and living with inflation. They also advise taking more granular views and more frequent portfolio changes to navigate the new regime.
Pricing the damage is the first investment theme, with the team observing that equity valuations do not yet reflect the damage ahead, in their opinion.
The second theme is rethinking bonds, with higher yields being a gift to investors who have been starved for income, particularly in short-term government bonds and mortgage securities.
The third theme is living with inflation, with long-term drivers such as aging workforces keeping inflation above pre-pandemic levels. BlackRock remains overweight in inflation-linked bonds on both a tactical and strategic horizon.
The team notes that the new regime requires a new investment playbook that involves more frequent portfolio changes and a focus on sectors, regions, and sub-asset classes, rather than broad exposures.
They believe that the economic damage is already priced in the markets, and while they will turn positive on equities, they do not anticipate another decade-long bull market in stocks and bonds.