Top global asset managers expect return to growth, higher inflation in 2021

Top global asset managers, speaking at the Future Investment Initiative (FII) conference, which opened yesterday, Jan. 27, in Riyadh, said they expected 2021 to witness a return to growth as nations get the COVID-19 pandemic under control amid the rollout of new vaccines, along with a rise in inflation rates.

Bridgewater’s Ray Dalio said: “We will see a rebound in growth and a rebound in inflation."

A pick up in deficits is also likely, leading governments to sell more bonds, he added.

Larry Fink, CEO of the world’s largest asset manager BlackRock, shared the same viewpoint, expecting a return to growing inflation.

“It is fair to assume we are going back into an era of growing inflation,” he added, predicting that developed countries would establish herd immunity against COVID-19 around September.

Fink also said he was bullish about long-term investment with a focus on climate change.

"Overall, I think because of the great needs of investing for climate change, and because of the pools of the savings and the great need for long-duration assets, I would say the fundamentals going forward into 2021 and beyond are pretty favourable for long-term investors," he added.

“I think we are going to have a huge amount of job creation, but all these elements are highly potentially inflationary,” Fink noted.

Elsewhere, Thomas Gottstein, CEO of Credit Suisse, said that a rise in inflation and policy rates is the biggest challenge in the coming period, despite the big role played by environment-friendly investments and governance globally.

The valuation of some assets has become higher globally, Gottstein added, expecting markets to perform well in 2021.