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By Victor Zhang - May 10, 2018
Volatility came roaring back during the first quarter after an extended period of relative calm. Equity markets around the world experienced long overdue corrections amid worries about rising inflation, the growing U.S. federal deficit, and higher U.S. Treasury yields. These concerns, along with speculation of tariff-induced trade wars, once again reminded investors about the dangers of complacency.
U.S. stock valuations are a bit less stretched thanks to first quarter corrections, but they remain quite high by historical standards and relative to other developed markets. Bullish investors argue these valuations are justified by modest growth and healthy corporate profits, while bearish investors caution there's a risk for higher inflation and faster-than-expected Federal Reserve (Fed) rate hikes.
While we may be experiencing a synchronized upswing in growth, we believe investors need to think in terms of stages of growth. The U.S. has enjoyed rising earnings-per-share estimates for some time; Europe and emerging markets (EM) forecasts are rising for the first time since 2011. Importantly, EM growth forecasts continue to be revised higher, which may widen the growth differences between EM and the U.S. in 2018.
Long-term bond investors have also enjoyed an extended period of positive performance. While we see few reasons to expect big changes in bond market fundamentals in the near term, one challenge stands out: finding value. We're seeing opportunities in mortgage credit and corporate securities in the U.S., along with select developed and emerging market bonds.
In this quarter's Investment Outlook, you'll learn more about our CIOs' views on these and other topics, as well as their thoughts on managing risk and positioning retirement portfolios in this more volatile environment.
Chief Investment Officer Dave MacEwen has a sunny outlook for 2018, provided inflation doesn't cloud the picture.
January 22, 2018
Market fundamentals are strong, but the stock markets are down, frustrating stock investors. Our co-CIOs weigh in.
February 08, 2018
Find out why we believe that technological change is crucial to improving outcomes in many aspects of life, including investment management.
July 06, 2017
On Sept. 26, the Federal Reserve announced its decision to raise interest rates for the third time this year. American Century Co-CIO Victor Zhang shares his thoughts—and what's likely to happen in 2019.
September 26, 2018
Concerns about rising interest rates and inflation took center stage for investors this week, culminating in a steep stock market sell-off.
February 02, 2018
International investing involves special risks, such as political instability and currency fluctuations.
Generally, as interest rates rise, bond prices fall. The opposite is true when interest rates decline.
Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.
The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.