Strategist: Investors Need To 'Be Very Careful' Where They Take Risk
BlackRock's global chief investment strategist Richard Turnill has some advice for shareholders.
Turnill helps manage and oversee BlackRock's nearly $4.9 trillion in assets under management was a guest on CNBC. He started off by saying there is an ongoing shift in the "economic regime" from a multi decade trend of slow growth and no inflation which drove bond yields lower.
Turnill said the prior "economic regime" now appears to be over and we are entering a new environment where growth is "still slow" but inflationary pressures are "picking up," most notably in the US but also seen in China.
Turnill suggested that one of the driving forces behind this "regime change" comes from central banks that are saying either explicitly or implicitly that they are willing to "tolerate a period of rising inflation" and inflation is a problem that central banks "feel confident they can tackle down the path."
Central banks that are signaling views explicitly include the Bank of Japan and the Bank of England while central banks that are implicitly signaling its views include the U.S. Federal Reserve.
"I think that has very serious implications for investors," Turnill said. "It means we are still in a low return environment but investors have to be very careful about where they're taking risk - increasingly they are being paid to take risk in areas outside of fixed income."
As such, investors need to now "take focus" on where investors are assuming risks across asset classes and regions including credit, emerging markets and dividend growth stocks.
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