Politics, trade conflicts, and concerns about higher interest rates dominated 2018 and are bound to affect 2019 as well. However, the economic cycle will remain the key driver of markets. Although growth is likely to slow in 2019, we believe that the momentum is solid enough to support further economic expansion.

Typically, in late stages of past expansions, equities have outperformed other asset classes, while bond yields have risen and yield curve flattened. We, therefore, maintain a growth tilt in our strategy and recommend a small overweight in equities. While being mindful of risks, we also favor uncorrelated and convex return strategies. Our key investment themes for 2019 are interest rate normalization; regional economic divergence; and new geopolitical regimes.