Shift to Reflation

Preparing Portfolios for the New Reflationary Regime

After a prolonged recovery from the financial crisis, markets have finally shifted toward a new reflationary regime. Asset class behavior varies significantly during regime shifts, which means that strategies that worked well in the past may no longer serve investors well. It will become increasingly important for outcome-oriented investors to position for what lies ahead. We first brought regime change to light in our 2017 Multi-Asset Investment Outlook, Fasten Your Seat Belts, It’s Going to Be a Bumpy Regime Change. We continue to explore this secular turning point and its impact on asset allocation decisions through our series of reports.
Regime Change: Implications of Recent Macro Shifts on Asset Classes
Regime Change: Implications of Recent Macro Shifts on Asset Classes
When markets transition to a new regime, they are met with fundamental changes in the investing environment. We highlight the drivers behind the new regime and why investment success ahead will require a more active approach.
Assessing the Impact to Portfolios
Assessing the Impact to Portfolios
Asset class risk and return characteristics are morphing as markets move to a new reflationary environment. We offer an actionable framework for portfolio construction with important allocation changes for investors to consider.
How the Shift to Reflation Impacts Our Asset Allocation Decisions
The key missing source of growth in the last market regime was corporate investment, and we are now seeing early signs of an acceleration in corporate capex, particularly in productivity-enhancing technology. Explore how this affects the Capital Market Line, our five-year, forward-looking outlook on risk and returns, and how we’re positioning to take advantage of this critical development.

Capital Market Line (as of 30 September 2017)


Capital Market Line


Based on PineBridge Investments’ estimates of forward-looking five-year returns and standard deviation. The Capital Market Line (“CML”) is not intended to represent the return prospects of any PineBridge products, only the attractiveness of asset class indices, compared across the capital markets. Please see Capital Market Line Endnotes. Note that the CML’s shape and positioning were determined based on the larger categories and do not reflect the subset categories of select asset classes, which are shown to relative to other asset classes only.