Investment Insights Dezember 2011 - DWS Investments

Asset classes in 2012 in summaryOpportunities and concerns for each of themain asset classes in our Global InvestmentCommittee (GIC) model portfolio.Fixed income – sovereign, developed and emerging markets.US Treasuries could do a good job at helping protect againstagainst a further sharp deterioration in the investmentenvironment, but yields could increase (i.e. prices fall) undermore favorable scenarios. European debt is unlikely to fulfillthis protective role, but could offer some value opportunities.Emerging market sovereigns appear better placed thandeveloped market sovereigns, but there is currency risk to beconsidered.Fixed income – corporate, investment grade and high yield.US high yield is likely to appeal, but has some liquidity andvolatility risk. Investment grade corporate bonds are likelyto outperform government bonds.Developed market equity.US equities are likely to outperform European equities, earlyin the year at least. Improving price multiples could offsetthe effect of decelerating earnings growth. Prefer large caps.Look for longer-term opportunities in globally-focusedmultinationals in Europe.Emerging market equity.If there is a sustained recovery in the developed economies,particularly in Europe, Asian equities could eventually start tobetter reflect strong regional growth, after poor recentperformance.Private equity.This will have a role to play in financing the consolidationof medium-sized companies, and in distressed debt andequities opportunities in Europe.Absolute return.Increasing clarity on the Eurozone – which would allow anincreasing range of approaches, rather than simple good/badoutcome plays, and a greater focus on fundamentals – couldenable some hedge fund strategies to perform better in 2012than in 2011.Commodities.There is some moderate possible upside in gold, but there islikely to be no clear direction. Elsewhere, many cyclicalcommodities prices may struggle, particularly if global growthdrops below 3 percent. Oil could be slightly more resilient tolower economic growth.Page 24 Investment Insights December 2011