Where are the investment opportunities in 2021 and beyond?

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Overview

Seismic Shocks:
An Introduction

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Pivoting
the Business

Man pulling rope with large quarter through levers that look like COVID19 molecules

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Paying
for the Pandemic

Car driving on a twisted road with sun in horizon

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Navigating
the New Market

Picture of Tony Roth
Contributor

Tony Roth, Chief Investment Officer for Wilmington Trust Investment Advisors, Inc. View bio

One of many defining features of 2020 has been the disconnect between the near-term trajectory of the economy and the record-breaking stock market levels. This disconnect is one of the reasons we maintained a slightly cautious stance in our client portfolios through October, but with a tactical tilt toward growth-oriented equities.

As we enter 2021, that gap between our 12-month economic outlook and equity market valuations is starting to close, and we find the backdrop of an improving economy and a supportive Federal Reserve to be one of the most constructive for equities since before the pandemic hit. Therefore, in November 2020, we added to equities, bringing this asset class to a slight overweight and overall portfolio risk in line with our strategic benchmark. Vaccine progress and expectations for accelerating productivity growth are leading to a broadening of equity market strength in different regions and more cyclical areas of the market. But the structural shift toward digitization in all areas of the economy means growth equities, particularly in the U.S. and emerging markets, remain a compelling investment over a multi-year horizon.

The road to recovery is one that includes some rocks, detours, and potholes, and we caution that the near-term outlook for financial markets could include some volatility. We are constructive on equities as the outlook for vaccines, fiscal stimulus, and monetary policy are all creating a positive backdrop for risk assets over a 9- to 12-month investment horizon. Of the asset classes in which we have a position, we have the highest conviction in U.S. small-cap and emerging markets equities and are currently overweight both. With this base case in mind, we would advise clients with excess cash to use any market dips as potential opportunities for getting fully invested. It is also critical to speak with your advisor about ways to stress test your portfolio to better appreciate the long-term implications of future volatility on your ability to achieve your investment goals.

We expect—and hope—that 2021 will look very different from 2020, and with it will come new challenges and investment opportunities that we will continue to seek on behalf of our clients’ portfolios. The world has changed dramatically over the past 12 months. What has not changed is our investment philosophy, core tenets, and focus on helping our clients achieve their investment goals.

Videos

Chief Economist Luke Tilley provides an overview of the implications of the COVID-19 recession on firms’ productivity, profitability, and equity performance.

Head of Investment Strategy Meghan Shue shares her insights on the trend of industry consolidation—what's shrinking, what's growing, where, and why.

The landscape of business is evolving due to the pandemic, along with accelerating trends. So when the COVID dust settles, which industries will have toppled—and which will be left standing?

Attention municipalities: Agencies and investors are carefully judging you on your overall financial health. Hear what Wilmington Trust’s Head of Municipal Fixed Income Dan Scholl has to say on this and the anticipated market trajectory.

Director of Taxable Credit Research and Senior Portfolio Manager Randy Vogel, CFA, shares the pandemic’s impact on credit quality, the Fed’s supportive actions, and the role of investment-grade debt in client portfolios.

Head of Fixed Income Dominick D'Eramo, CFA, looks at why inflation is important for fixed income investing, the risks at play, and how he’s aiming to manage them.

Does your portfolio reflect the accelerating trend toward heightened consumer digitization? Head of Investment Strategy Meghan Shue connects the dots.

An alternative to volatility and drawdown? Head of Equities, Nontraditional Investments & Manager Research Matt Glaser reveals where he finds the potential for differentiated, compelling returns.

Learn More

Let's have a conversation about what the insights and trends revealed in our 2021 Capital Markets Forecast could mean for your investment portfolio and overall wealth management plan.