The world economy is undergoing a restructuring: secular growth drivers are reshaping the balance of economic power; the demographics of longevity and aging populations are intensifying the retirement saving imperative; while the financial risk environment has been transformed by the 2008 credit crisis and ongoing sovereign debt crisis.
The search for income – already a powerful investment theme – is set to grow in importance over the next decade and beyond. There are a range of near-term and longer-term drivers:
- low interest rates and bond yields are driving a broader search for yield
- slower economic growth in many developed nations burdened with high debt levels is likely to put greater emphasis on income returns versus capital gains
- two large corrections in stock markets in 10 years have deflated sentiment towards equities, forcing investors to reassess their strategies
- the funding challenges facing governments hamstrung with public debts is likely to lead to responsibility for retirement saving increasingly falling on individuals
- aging populations with people living longer will increase retirement saving
- the need to maintain or grow real income levels during retirement to protect the purchasing power of savings from inflation will support investment in real, income-paying assets.
The investing environment of tomorrow is set to be quite different to the one which investors became accustomed to in the last 25 years.
To read the white paper, click here.
