Q1 Investment Outlook: There’s Room to Improve, but Remain Defensive

Here are key takeaways from our latest client-approved Investment Outlook report:

  • With muted expectations for economic and profit growth in the new year, we recommend a balanced approach with a keen eye toward withstanding swings in investor sentiment and unexpected economic or geopolitical events.
  • Consumer spending remains remarkably resilient and is the main reason the bull market has continued well past historical norms. Monitor employment data and the level and direction of interest rates for clues on the future strength of the consumer.
  • Earnings growth is becoming scarcer. We believe the market will reward companies that deliver above-consensus results rather than those reliant on an economic expansion or cyclical recovery.
  • Despite lingering macroeconomic pressures, the case for emerging market equities remains compelling with attractive valuations and opportunities in individual markets.
  • Though we don’t expect a broad recession in the U.S. or globally, narrower segments of the economy could experience recession-like symptoms, creating buying opportunities in out-of-favor sectors and industries.
  • Heightened trade tensions, slowing global growth, muted inflation and dovish central banks are positives for U.S. Treasuries, which continue to offer higher relative yields than government securities elsewhere. We have a negative outlook for European sovereigns and credits.
  • Despite a challenging 2019 environment for leveraged loans, our Alternatives team believes investors have opportunities among select loans and collateralized loan obligations unduly punished by the flight to quality.
  • Responding to heightened interest from investors and positive market feedback, publicly traded companies continue to make material progress in their advances in environmental, social and governance sustainability. Long term, we believe the market will reward these initiatives.

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Important Notices and Disclosures

References to specific securities are for illustrative purposes only and are not intended as recommendations to purchase or sell securities. Opinions and estimates offered constitute our judgment and, along with other portfolio data, are subject to change without notice.

International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks.

Alternative mutual funds that hold a variety of non-traditional investments often employ more complex trading strategies than traditional mutual funds. Each of these different alternative asset classes and investment strategies have unique risks making them more suitable for investors with an above average tolerance for risk.

Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

As with all investments, there are risks of fluctuating prices, uncertainty of dividends, rates of return and yields. Current and future holdings are subject to market risk and will fluctuate in value.

Historically, small- and mid-cap stocks have been more volatile than the stocks of larger, more established companies.

Diversification does not assure a profit, nor does it protect against loss of principal.

Generally, as interest rates rise, bond values will decline. The opposite is true when interest rates decline.

Past performance is no guarantee of future results. Mutual fund investing involves market risk. Investment return and fund share value will fluctuate. It is possible to lose money by investing in mutual funds.

The opinions expressed are those of the chief investment officers and are no guarantee of the future performance of any American Century Investments portfolio. Statements regarding specific holdings represent personal views and compensation has not been received in connection with such views.

This information is not intended to serve as investment advice. The information is not intended as a personalized recommendation or fiduciary advice and should not be relied upon for investment, accounting, legal or tax advice.

For Financial Professional Use Only / Not for distribution to the public. ©2019 American Century Proprietary Holdings, Inc. All rights reserved.

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