Next decade to be defined by more frequent recessions

ON ASSET ALLOCATION

Insight's Matthew Merritt says the after-effects of the financial crisis are likely to result in a more volatile economic environment over the next 10 years.

With economic data in the Western world improving, a cyclical recovery is underway in the developed world. This provides a constructive environment for equities, although our exposure is currently skewed to the developed world as we remain wary of markets where we see crowded trades. In our view, however, we are not witnessing a ‘normal’ recovery and to an extent we are in unchartered territory, with no clear medium-term path being evident. There are significant structural imbalances at a country level, in the form of unsustainable budget deficits in Europe and the US, for example. ...