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Market Outlook for 2020: Trade Tensions, Election Risk, Volatility

As directors prepare for another year of fund oversight, they can expect to hear many predictions for the year ahead, including how stock market gyrations might affect their funds. Bloomberg has put together a “readers digest of research notes for the year ahead” that may help fund directors anticipate Wall Street trends for 2020. The research notes come from leading institutions including BlackRock, Fidelity, Amundi, and BNYMellon. There is strong consensus that trade tensions and U.S. election risk are major factors going into the year and a U.S. recession is not a major worry. Several firms, including Fidelity International and Columbia Threadneedle, say while growth acceleration might be unimpressive in 2020, they do not anticipate a recession occurring.  Macquarie Global Macro says the biggest risk remains an escalation of the trade war. Bank of America says the trade war remains at the core of its macro forecasts, while 2020 U.S. elections approach. State Street Global Advisors writes that geopolitical uncertainty and trade risks could materialize as dramatic spikes in volatility. As for the funds sector, mutual funds continue to face the threat of passive investing as index funds continue their march forward with assets surpassing $10 trillion globally, according to the Financial Times and total assets in ETFs surging past $6 trillion.

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