2021 – A list of lists regarding the macro investment outlook

January 11th 2021

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Key points

  • 2020 turned out far better for investors than was feared.
  • 2021 is expected to provide solid returns & see a further rotation from pandemic winners to cyclical investments.
  • Watch: coronavirus and vaccines; US politics; China tensions; inflation; & the hit to immigration in Australia.



2020 turned out far better for diversified investors than had been feared when the pandemic hit triggering plunging share markets and deep recessions, with average balanced growth superannuation funds looking like they have returned around 3%. This followed around 15% last year. Balanced growth super funds returns have averaged around 7% p.a. over the last five years which is well above inflation & bank deposit returns.


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Source: Mercer Investment Consulting, Morningstar, AMP Capital


But can returns hold up? Here is a summary of key insights and views on the investment outlook in simple point form.


Six reasons 2020 was better than feared for investors

Despite the pandemic, recession and a 35% plunge in shares into March 2020 were better than feared for investors as:

The first four points contributed to economies bouncing back faster than expected through the second half – even though we are still far from a full recovery and coronavirus continued to wreak havoc. The anticipation of recovery and ultra-low interest rates drove a rebound in many investment markets.


Five lessons from 2020


Three positive longer-term impacts from the pandemic

The longer-term negatives from the pandemic – in terms of higher unemployment; a further blow to globalisation; tensions with China; increased social tensions; more public debt; the risk of higher inflation long term; disruption for various industries like airlines, retail and office – are well known and have been covered to death. But there are four key longer-term positives:


Four reasons for optimism for 2021

The first two should support a solid rebound in global growth and profits (beyond near term COVID-19 lockdowns). At a time of significant spare capacity, it should be accompanied by still low inflation and hence interest rates, meaning that we are still in the “sweet spot” of the investment cycle.


Key views on markets for 2021

After having run up so hard since early November, shares are vulnerable to a decent short term pullback (say 5 to 15%) and 2021 is likely to see a few rough patches along the way (much like we saw in 2010 after the recovery from the GFC), but looking through the inevitable short term noise, the combination of improving global growth and low-interest rates augurs well for growth assets generally in 2021.


Six things to watch


Five reasons Australia is likely to outperform


Nine things investors should remember

Yeah – I had these last year, but they are mostly timeless!


If you have any questions about this please contact us.

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About the Author

Dr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist at AMP Capital is responsible for AMP Capital’s diversified investment funds. He also provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets.

Important note: While every care has been taken in the preparation of this article, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) makes no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This article has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this article, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This article is solely for the use of the party to whom it is provided.