Aviva Investors sees lower returns for risk assets in 2019

Aviva Investors, the global asset management unit of Aviva PLC, is tempering return expectations for risk assets as global growth moderates and interest rates increase.

Global growth is expected to slow modestly in 2019 to 3.6 per cent from around 3.75 per cent this year, but remain at an above-trend pace in all the major developed economies. Last year growth picked up in the US, helped by fiscal stimulus, but slowed in the eurozone and Japan. These divergences should not intensify next year, but look set to remain.

Above-trend growth should result in further erosion of spare capacity in major economies, leading to further falls in unemployment and gently rising wage inflation. This should lead to higher underlying inflation which is expected to be at, or approaching, central bank targets in 2019, even if headline inflation dips because of lower oil prices.

The US Federal Reserve is likely to raise rates three times - entering slightly restrictive territory - although the market is only pricing in one rate hike for 2019. The European Central Bank may start moving away from negative rates in the second half of next year and there is some prospect that the Bank of Japan will adjust its policy framework to deliver a steeper yield curve.

Michael Grady, Head of Investment Strategy and Chief Economist at Aviva Investors, said:

“In a slowing growth environment, investors tend to focus more on downside risks. Although the economic backdrop continues to provide a basis for positive returns for risk assets, expectations of more moderate growth and tighter global liquidity, and the impact of those risks, justify more restrained positioning.

“We prefer to be overweight in US and emerging market equities because of the expected relative growth outperformance. Valuations in Europe look more attractive in some areas, but downside risks such as Brexit and the Italian budget continue to weigh on the outlook.

“We are moderately underweight government bonds as yields will continue to move higher on expectations that central banks will tighten policy in 2019. With spreads relatively tight by historical standards, we have a bigger underweight with regard to credit, including duration. Our preference is for European over US high yield due to its lower leverage and reduced sensitivity to oil prices. We have a slight preference for being long US dollars, with the main underweight against Australia on domestic challenges and Chinese growth risks.”

The full document can be read here.


Notes to Editors


The information and opinions contained in this document are for use by the financial press and media only. No reliance may be placed for any purpose on the information or opinions contained in this document nor should they be seen as advice. 

The press release is provided on the basis that Aviva Investors Global Services Limited is not causing the communication of a financial promotion under exemption of the Financial Promotion Order, as Aviva Investors Global Services Limited has no control over the way in which an article based on this press release is prepared and published by the financial press and media. 

Except where stated as otherwise, the source of all information is Aviva Investors Global Services Limited (“Aviva Investors”) as 19 December 2018. Unless stated otherwise any views, opinions expressed are those of Aviva Investors. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature.  The value of an investment and any income from it may go down as well as up and the investor may not get back the original amount invested. Past performance does not indicate future results.   

Issued by Aviva Investors Global Services Limited, registered in England No. 1151805.  Registered Office: St Helen's, 1 Undershaft, London, EC3P 3DQ   Authorised and regulated by the Financial Conduct Authority.

Aviva Investors

Aviva Investors is the global asset management business of Aviva plc. The business delivers investment management solutions, services and client-driven performance to clients worldwide. Aviva Investors operates in 14 countries in Asia Pacific, Europe, North America and the United Kingdom with assets under management of £348 billion as at 30 June.


· Aviva provides life insurance, general insurance, health insurance and asset management to 33 million customers.

· In the UK we are the leading insurer serving one in every four households and have strong businesses in selected markets in Europe, Asia and Canada. Our shares are listed on the London Stock Exchange and we are a member of the FTSE100 index.

· Aviva’s asset management business, Aviva Investors, provides asset management services to both Aviva and external clients, and currently manages over £348 billion in assets. Total group assets under management at Aviva group are £490 billion.

· Aviva helps people save for the future and manage the risks of everyday life; we paid out £34.6 billion in benefits and claims in 2017.

· By serving our customers well, we are building a business which is strong and sustainable, which our people are proud to work for, and which makes a positive contribution to society.


Laura Cocker

Media Relations Manager

James Morgan

Media Relations Manager