Global Matters.pdf

2020 saw 16% returns from global developed world equities, 18% from emerging markets, and 10% from global government bonds, despite the coronavirus pandemic's enormous economic, financial, and human damage. The year was marked by extraordinary volatility, with a sudden market collapse and equally sudden recovery triggered by fiscal and monetary support. Digital winners from the pandemic, such as tech stocks, drove aggregate equity market returns, while value stocks, including energy, financials, and hospitality, were down over the year. Regional performance differed, with the US returning 18%, east Asian markets performing well, and Europe struggling with more damaging economic impacts. Bond markets were driven by a fall in nominal and real yields, with returns led by higher-yielding bond markets. Credit markets recovered rapidly, and convertible bonds returned 23%. Inflation expectations picked up, and gold reached all-time highs before consolidating. ESG investing became mainstream, and the 2021 outlook is more positive, with vaccines offering a game changer, although risks remain.