“Given the volatility in the public market, some investors may benefit from an investment in private equity and debt. Private investing can be less liquid, but for long-term investors that may not be a significant issue. Historically, private equity and debt have delivered competitive returns. For those who are able to invest, some allocation to the asset class may be warranted and prudent,” says Jae Yoon, Chief Investment Officer, New York Life Investment Management.

Yoon is a speaker at the marcus evans Insurance CIO Summit 2017, in Chicago, Illinois, March 20-21.

What is your outlook on the global economy and markets for 2017? 

We expect to see a continued shift to stocks as US and Global economic growth pick up pace. In the US we expect to see gross domestic product (GDP) improve due to likely tax reform, deregulation and infrastructure spending. The International Monetary Fund (IMF) predicts 2.3 percent US growth for 2017, but we believe it will be higher. We anticipate this GDP growth should translate to improved corporate earnings, by more than offsetting wage pressures, inflation and the Federal Reserve raising rates at a gradual clip.  

We are positive on US equities but in the tune of single digits. Valuations in the US are quite high so further multiple expansion is unlikely. We believe the dollar will continue to strengthen against other major currencies. Japanese equities will do well, maybe even better than the US. In Europe, valuations look good, but Brexit, as well as the elections in the Netherlands, France and Germany, provide reasons to be cautious. Emerging markets have attractive valuations, but rising protectionist currents may pose challenges. If the US economy continues to improve, Japan and possibly Europe (if geopolitical risks settle) will benefit and should do well in 2017. We believe the bond market will undergo some volatility, but it should settle down.

How can long-term investors prepare?

Long-term investors may want to consider minimizing their exposure to long-duration fixed income securities. Whether they are a pension fund or insurance company, they need to be cautious of rising rates. We believe owning spread products may cushion potential losses resulting from a rise in interest rates. Where suitable consider shorter duration bonds and opportunities in credit.

How will the new administration in the US, with President Trump, impact this space? 

It is still early days for the new administration, and it is not yet clear how much of the promised policy agenda will be implemented and how quickly. A shortfall in policy progress versus market expectations could lead to occasional bouts of volatility, despite a growing economy.  

What new investment opportunities top your list? Which sectors or industries? 

 Emerging market equities hold long-term promise. We will also keep our eye on municipal bonds for an opportunity to invest. In terms of equity market sectors, the energy sector outlook – including Master Limited Partnerships - improving. Declining oil prices in 2015 -2016 put pressure on the shale industry, but we believe prices have stabilized and will trend higher over the long-term as supply has been curbed by cutbacks in investment and a recent agreement by oil producers. Of note, the US now plays an important role in setting the price of oil as its share of production has grown. US Technology companies are world leaders in innovation. These are some of the key opportunities today.

Should investors avoid any industries or strategies?

 We believe Treasury bonds and cash are likely to produce underwhelming returns.

Past performance is not indicative of future results.

 The information and opinions contained herein are for general information use only. New York Life Investment Management does not guarantee their accuracy or completeness, nor does New York Life Investment Management assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, and are not intended as an offer or solicitation with respect to the purchase or sales of any security or as personalized investment advice. There can be no guarantee that any projection, forecast, or opinion in these materials will be realized.

New York Life Investment Management is a wholly owned subsidiary of New York Life Insurance Company

More Information

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For more information, please contact:
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Ahead of the marcus evans Insurance CIO Summit 2017, read here an interview with 
Jae Yoon discussing what long-term investors should expect in 2017 and beyond

Jae Yoon

Chief Investment Officer

New York Life Investment Management

What Investment Opportunities Long-Term Investors Should Look At

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  • Chief Executive Officer, Alberta’s Teachers’ Retirement Fund Board
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  • CIO, Arizona Public Safety Personnel Retirement System
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    and more…

About the Insurance CIO Summit 2017

The Insurance CIO Summit is the premium forum bringing elite buyers and sellers together. The Summit offers senior investment executives and service providers an intimate environment for a focused discussion of key new drivers shaping asset allocations. Taking place at The Drake Hotel, Chicago, Illinois, March 20-21, the Summit includes presentations on the Key Insurance CIO Themes in a New Administration, the aging US expansion, and investment challenges CIOs are facing in the insurance industry.

Copyright © 2017 Marcus Evans. All rights reserved.

Summit Speakers
  • Eric Kirsch, Chief Investment Officer, Aflac
  • Deva Mishra, Managing Director, Head of Asset Allocation, Global Atlantic Financial Group
  • Waymond Harris, Director, Investments, Blue Cross Blue Shield Michigan
  • Sara Bonesteel, Chief Investment Officer, Prudential Financial
  • Michael R. Englund, Principal Director and Chief Economist, Action Economics LLC
  • Glenn Gazdik, Senior Vice President, Risk Manager ERM, The Hartford

     and more...

20 - 21 March 2017

The Drake Hotel, Chicago, Illinois

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