We have written all year about the changing regimes, both in financial markets and in the geopolitical landscape. As we sit here entering the dog days of year end, not much more is known and not much is more certain. These two facts alone did and will cause issues for financial assets.

The interesting and good news about the current market environment is the lack of conviction on the outcome. This dichotomy of outlook provides a good basis for active management outperforming.

The second piece of good news to focus on is the current yield available on fixed income securities. It has been over a decade since bonds have yielded 5 percent or more. This is a long-term positive for the financial markets.

What is our outlook?

It is hard to imagine the markets turning so bullish as to see a reversion from negative to positive territory for either stocks or bonds.

Having said that, it is also hard to imagine returns challenging the lows we have seen, barring a major geopolitical event.

As we start looking ahead to 2023, the positives of higher interest rates, better valuations and the strength of the consumer to buoy the economy underpin our outlook for growth.

What does our outlook cover?

The Q4 2022 Investment Outlook includes tables that provide a snapshot of our forward-looking observations on the direction of specific asset classes.

Specifically, for 24 asset classes, we select one of five outlook signals based on our 12–18 month perspective relative to our 10+-year CMAs. The signals range from an above-normal return outlook to a below-normal return outlook.

The asset classes include equities, fixed income and these alternatives:

• Hedge funds
• Multi-asset class strategies
• Private equity
• Real estate
• Infrastructure
• Commodities
• Energy
• Timber
• Farmland