False dawns or the start of change? The 12 key investment views and trends for 2021

Managers give their sector predictions for next year

2021 is just around the corner, and hopes are rising that certain sectors will bounce back. Should investors get carried away or approach with caution? 12 investment experts give their predictions on how areas such as ESG, global equities and artificial intelligence will fare next year.

Christopher Rossbach, manager of the J.Stern & Co. World Stars Global Equity fund

Global equities

The US Election result, and in particular the prospect that the next occupant of the White House is a pragmatic moderate with decades of political experience, sets the tone for the next four years in terms of politics and markets.

Given the challenges, investors will welcome a period of more constructive policies and greater predictability, while the vaccine news from Pfizer-BioNTech and Moderna has also been highly positive. 

It is also clear that governments and central banks will do whatever it takes to support their economies through this period of challenge and distress.

The current low, and in many cases negative, interest rate environment is likely to prevail for a prolonged period of time and forces investors to adjust their expectations of risk and reward from their investments. 

The US and Europe are still in the middle of the second wave of Covid-19 and are facing renewed lockdowns, with the expected negative impact on economic growth, unemployment and further increases in national debt.  

Mass vaccination will present major logistic challenges for a variety of reasons and will not be widely rolled out until the second half of next year. 

These challenges are daunting but we should focus on the positive: The fact that the virus responds to vaccines at all means that we will overcome it and that the markets' overreaction is an opportunity even in this calamity. 

We can see how positively the outcome of the US elections, coupled with the news about the effectiveness of both mRNA vaccines, has been received by investors. People are worried about meltdowns but it could be the start of a melt-up phase for markets.

With the US and other regions reaching record highs, we expect healthcare, consumer and industrial stocks to join digital names in leading equities onwards now investors can look ahead into next year with greater certainty. 

Chris Ford, manager of the Smith & Williamson Artificial Intelligence fund

Artificial intelligence (AI)/technology outlook

Assuming that world can move on from Covid-19 - and we sincerely hope that will be the case - we would expect investors to focus on the themes and opportunities that will allow policymakers to begin to reverse some of the significant economic and social damage caused by the pandemic.

We expect AI to play a key role here as it can automate very dull and repetitive work and crucially get it done faster and more efficiently than humans.

It can also help experts to become more effective by taking on routine jobs and tasks so that they can focus on more complex problems.

And most importantly, it can produce new insights and new ideas that humans might miss and thus allow us to achieve better outcomes for a given level of resources.

Throughout the world, we think that there will be huge pressure on governments to provide better, fairer and more effective healthcare systems, build better infrastructure to control and monitor dangerous diseases and crucially invest a lot more in early detection and sensing so that dangerous diseases do not get out of control in the first place

Prevention is always better than cure. Again, AI can play a role in all of these areas and this gives us great confidence that our opportunity set will keep growing over time.