What might a fall in oil prices mean for rotation?

While the drop back in oil prices which we forecast would probably mean an end to the recent outperformance of the energy sector, we doubt it would halt several other features of the rotation trade.
Oliver Allen Markets Economist
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Asset Allocation Update

We doubt US equities will underperform across the board

We forecast that equities in other developed markets (DMs) will outperform US equities over the next couple of years. By contrast, we expect equities in many emerging markets (EMs) to underperform their US peers. That divergence in performance relative to the US would be a break with the typical pattern.

21 January 2022

Asset Allocation Update

Our outlook for fx-hedged returns in 2022

When it comes to developed markets (DMs), we suspect that fx-hedged returns will be significantly better than unhedged returns for US dollar-based investors in foreign-currency-denominated assets.

17 January 2022

Asset Allocation Update

EM equities may continue to underperform in 2022-23

We think that emerging market (EM) equities will continue to underperform their developed market (DM) peers over the next couple of years, even if that underperformance is far less stark than it was in 2021.

13 January 2022

More from Oliver Allen

Capital Daily

On the fading of reflation and rotation

While we doubt that the “reflation” and “rotation” trades are entirely dead, they may have now largely run their course.

7 July 2021

Asset Allocation Update

REITs, equities and the threat of higher inflation

We doubt that US equity REITs would significantly outperform US equities in a period of higher inflation.

24 June 2021

Long Run Returns Monitor

Long Run Returns Monitor (Jun. 2021)

Given that the moves in most financial markets since the previous editionof our Long Run Returns Monitor have been fairly small–at least for the period as a whole –the returns that we are projecting from most assets between now and the end of 2030 have changed only marginally. That said, the higher starting points that have resulted from their rallies in recent weeks mean that we are projecting somewhat weaker returns from energy commodities, Latin American equities and developed markets (DM) REITs. Meanwhile, the stumble in industrial and precious metals of late means that our projected returns from them are now a little less downbeat.

24 June 2021
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