In this article, we provide a summary of AEGON Asset Management’s expectations for the global economy and for asset class returns in the coming four years.
The European debt crisis is steadily worsening. Although the problem initially appeared to have been contained within a number of smaller peripheral countries, the markets have recently turned their attention to the larger European economies, most notably Italy and Spain. Now it appears that the Belgian and even the French bond markets are no longer seen as a safe investment. The outcome of the debt crisis appears to be largely dependent upon the actions taken by Europe’s politicians and the European Central Bank.
Although it is clearly impossible to predict what politicians will do, AEGON Asset Management in the Netherlands has instead analysed a range of possible scenarios for the coming years in order to highlight some trends visible today that, from an investment perspective, may be valuable in deciding upon asset allocation. In this article, AEGON Asset Management in the Netherlands provides a summary of most probable or ‘baseline’ scenario.
Its baseline assumption is that the crisis will not massively escalate, but that it will result in low economic growth due to continued deleveraging. This scenario is fairly positive for risky asset classes, although the probability of a more negative scenario remains significant.
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