4 Investment Themes for the Year Ahead

Some of the most promising opportunities for investors in 2020 could be ones that present solutions to the world’s most pressing problems, believes Michael Hartnett, Chief Investment Strategist for BofA Global Research. Watch our video to learn more.

Transcript Close Transcript

Outlook 2020

4 Investment Themes for the Year Ahead

With Michael Hartnett

Chief Investment Strategist, BofA Global Research

Please see important information at the end of this program. Filmed on 11/12/2019

We believe that the best investment themes in 2020 are really going to be the solutions to the issues that investors are worried about.

[TEXT ON SCREEN]

1: Inequality & Populism

For example, inequality and populism. One way to address that is obviously via …

[TEXT ON SCREEN]

Fiscal policy & infrastructure spending

… fiscal policy and particularly infrastructure spending.

So one theme going forward we think is certainly going to be global infrastructure plays,

[B-roll of utilities and industrial footage]

…particularly in sectors like utilities, energy, or even the industrials.

[TEXT ON SCREEN]

2: Climate Change

Climate change is also a subject that people are very, very worried about.

[B-roll of solar panels]

One of the industries that we think looks appropriate in terms of addressing this problem is the solar industry. So that's another thing that we think will pick up going forward.

[TEXT ON SCREEN]

3: Demographics

Another theme is obviously demographics. This is always a theme but we are seeing this dramatic aging of the population. What does that mean?

[B-roll of biotech and healthcare footage]

To us, it means that health care and biotech are the most likely sectors to take over the leadership of the equity market from technology.

It will also offer opportunities for asset managers, particularly those that can address the needs of an aging population and delivering a good and sensible way for them to save going forward.

[TEXT ON SCREEN]

4: Emerging market consumer

Emerging markets we think after a number of years where they've been out of fashion, the consumer continues to grow in emerging markets.

[B-roll of emerging market consumers and satellite footage]

Just in 2019 you saw 100 million more Indians and Chinese join the Internet. And that's a lot of spending power. So we think the emerging market consumer is also a good theme going forward.

Of course, with themes there always comes risks. [TEXT ON SCREEN]

Inflation could be a key risk in 2020

The most obvious one is inflation. What we've enjoyed for a number of years now is falling interest rates and rising earnings, and we've been able to enjoy that because inflation has been low.

The greatest risk to markets really in 2020 is a surprise rise in inflation that reduces earnings and raises interest rates and unwinds some of the gains that we've enjoyed in recent years.

IMPORTANT INFORMATION

Any opinions or other information correspond to the date of this recording and are subject to change. The views expressed are not necessarily those of Bank of America Private Bank or Merrill.

The information is general in nature and is not intended to provide personal investment advice. The information does not take into account the specific investment objectives, financial situation and particular needs of any specific person who may receive it. Investors should understand that statements regarding future prospects may not be realized.

Investing involves risk, including the possible loss of principal.

Bank of America does not predict any increase or decrease in interest rates.

Investments have varying degrees of risk. Some of the risks involved with equity securities include the possibility that the value of the stocks may fluctuate in response to events specific to the companies or markets, as well as economic, political or social events in the U.S. or abroad. Investments in foreign securities involve special risks, including foreign currency risk and the possibility of substantial volatility due to adverse political, economic or other developments. These risks are magnified for investments made in emerging markets. Investments in a certain industry or sector may pose additional risk due to lack of diversification and sector concentration.

Asset allocation, diversification, and rebalancing do not ensure a profit or protect against loss in declining markets.

Bank of America, Merrill, their affiliates, and advisors do not provide legal, tax, or accounting advice. Clients should consult their legal and/or tax advisors before making any financial decisions.

BofA Global Research is research produced by BofA Securities, Inc. (“BofAS”) and/or one or more of its affiliates. BofAS is a registered broker-dealer, Member SIPC, and wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”).

Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as “MLPF&S” or “Merrill”) makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of BofA Corp. MLPF&S is a registered broker-dealer, Member SIPC, and a wholly-owned subsidiary of BofA Corp.

Bank of America Private Bank is a division of Bank of America, N.A., Member FDIC and a wholly owned subsidiary of BofA Corp.

Investment products:

Are Not FDIC Insured

Are Not Bank Guaranteed

May Lose Value