2013 Outlook Over the Horizon. Goldman Sachs sees interests rates staying low for a long time, despite having no nominal return for the foreseeable future. They cite the 11.5 year period from 1939 when interest rates remained below 2.5%. Cumulative asset class returns from 2009 are included, with 2012 showing continued growth in many sectors. US Equity leads the pack form 2009 (+136%) while EM Equity led for 2012 (+18.6%).
Best investments for 2013 and 5 years out: EM debt, high yield debt, Euro Stoxx 50 equities and US bank stocks. Hedge funds will have mid-single digit return, a wide-spread outlook. They see a slight increase in world growth in 2013, led by emerging markets. “Ongoing global growth should support earnings, providing a rising fundamental floor for equities.” Page 10’s operating earnings vs. price chart says it all, stocks are incredibly undervalued.
Implied Total Return for 2013:
- US equities: 1% – 6%
- Euro Stoxx 50: 3% – 11%
- MSCI EM: 7% – 12%