Despite some initial uncertainty, markets rewarded investors with solid returns across almost all major asset classes in 2017 – fueled by a slow but steady increase in the breadth and depth of global economic growth. Heading into 2018, Legg Mason’s investment managers see few reasons to expect this positive environment to deteriorate.
Ironically, that good news has many investors wondering how long the trend can continue, with bullish sentiment relatively muted. While that typically is a signal that stocks may have more room to run, there are still risks worth watching – and given current valuations, gains next year will almost certainly require the kind of selective approach to sectors and securities practiced by active managers.
Against this background, how should investors and their advisors approach the goals that drive portfolios: harnessing growth, generating income and managing investment risk?