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For Professional Clients and, in Switzerland, for Qualified Investors only. In Israel for Sophisticated Investors only.
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IDEAS AND KNOWLEDGE TO INSPIRE YOUR INVESTMENTS THINKING
13 March 2019

The winners and losers of a decade of equity returns

Ten years can feel like eternity in financial markets. It’s hard to remember the mood back in early 2009 when the Global Financial Crisis (GFC) first struck. There was talk of the end of capitalism and that many of our great financial institutions were potentially worthless. What we got were revolutionary, well-coordinated responses from the world’s central banks: first, the aggressive cutting of interest rates, followed by successive rounds of quantitative easing (QE). And it worked to an extent. The world avoided a second great depression. Economies began to grow again, though that growth has been pretty anaemic in some countries.

 

We can draw three broad conclusions from the performance data: 1) the winners were those who suffered least from the banking crisis, or formulated strong policies to counter it; (2) the losers were the ones with the weakest banks and/or the poorest policies; 3) most markets saw a negative return in dollar terms.

 

And three implications for investors: 1) think hard about how, where, when and why monetary policy is likely to change; 2) avoid domestic bias – maintain a geographically diverse portfolio; and 3) think hard about managing currency risk – and dollar exposure in particular.

Shamik Dhar, chief economist, BNY Mellon Investment Management

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Investment Managers are appointed by BNY Mellon Investment Management EMEA Limited (BNYMIM EMEA) or affiliated fund operating companies to undertake portfolio management activities in relation to contracts for products and services entered into by clients with BNYMIM EMEA or the BNY Mellon funds.

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