Three investment trends for 2021

Toss 2020 to the kerb and start the new year strong with a portfolio of investment trends.

While this year has undoubtedly been tumultuous from a global pandemic to the US election, there is hope for a happier, healthier and more normal 2021 – even with the stock market.

As many global affairs determine where the strongest investment opportunities lay, Morgan Stanley Research’s Chief Cross-Asset Strategist Andrew Sheets reveals the outlook for the new year.

"Though challenges remain, we think this global recovery is sustainable, synchronous and supported by policy, following much of the normal post-recession playbook," Sheets says. "We’ve now transitioned to an early cycle environment, which implies strong profit growth that we believe is not yet priced into markets, despite the market’s recent rally."

No matter where you choose to put your cash, the US multination believes investors should stick to a refreshingly normal approach after a chaotic year – "trust the recovery and, for most assets, stick with early cycle playbook".

Three investment trends for 2021*

European rebound

Thought to be the worst year for European performance since the 1980s, Morgan Stanley experts believe there is potential for a strong bounce back in 2021 and even into 2022.

Early cycle phase

As smaller companies generally lead coming out of a recession, the investment bank suggests buying stocks with the lowest expectations is a strong move. US and European financials, materials and sectors hit hard by COVID-19 such as travel are likely to be in favour.

Other asset classes

Despite usually being a textbook early cycle choice, oil may not be the straightforward asset class of choice, according to Morgan Stanley. Instead, the US enterprise believes other options including copper could "tick all the boxes" for 2021.

*according to Morgan Stanley