The economic and market landscapes continue to evolve, and we expect some significant changes as we make our way through 2023. So, as always, we suggest focusing on key market signals, which we define as:
+ Economic growth rates
+ Inflation expectations
+ Monetary policy
+ Interest rates
+ Corporate earnings growth rates
And we provide our thoughts for 2023 on:
+ Fixed income
+ Real assets and alternatives
At the time of this writing, there are also some “known unknowns” that could significantly affect our perspective. These include:
1. Fed-induced volatility
2. The Russian invasion of Ukraine
3. China’s “zero COVID” policy and its economic and internal political repercussions
4. Simmering geopolitical challenges between the U.S. and both China and Iran
Glossary found at end for terms and Index definitions.
The following are our views on the signals we can currently observe 〉 〉
Unless otherwise stated, all data as of November 2022.
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There are risks associated with investing, including the possible loss of principal. Foreign investing involves special risks, such as risk of loss from currency fluctuation or political or economic uncertainty. Investments in emerging or offshore markets are generally less liquid and less efficient than investments in developed markets and are subject to additional risks, such as risks of adverse governmental regulation and intervention or political developments. Funds focusing their investments on certain sectors and/or regions and/or smaller companies increase their vulnerability to any single economic or regulatory development. This may result in greater share price volatility.
Fixed income investments are subject to interest rate risk; their value will normally decline as interest rates rise. High-yield or “junk” bonds have lower credit ratings and involve a greater risk to principal. Fixed income investments are also subject to credit risk, the risk that the issuer of a bond will fail to pay interest and principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline.
You cannot invest directly in an index. Index performance assumes reinvestment of dividends but does not reflect any management fees, transaction costs or other expenses that would be incurred by a portfolio or fund, or brokerage commissions on transactions in fund shares. Such fees, expenses and commissions could reduce returns.
This material contains the opinions of the authors, which are subject to change, and should not be considered or interpreted as a recommendation to participate in any particular trading strategy or deemed to be an offer or sale of any investment product, and it should not be relied on as such. There is no guarantee that any strategies discussed will work under all market conditions. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This material should not be relied upon as research or investment advice regarding any security in particular. The user of this information assumes the entire risk of any use made of the information provided herein.
Kevin Flanagan, Rick Harper, Jeremy Schwartz, Scott Welch and Jeff Weniger are registered representatives of Foreside Fund Services, LLC.
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