Most countries are going to introduce some degree of lockdown.
Would your forecast be bullish? And would you put more of your own savings in risk assets?
We all know the probable answer: You'd be smitten with the same fear that caused the markets to collapse in March. And yet, after completing the tally one year later, we can safely conclude that 2020 turned out to be a very satisfactory year indeed – in terms of financial returns, that is. So much for financial forecasting. If you've seen the markets from this angle before, it certainly bears repeating.
In fact, every one of our funds, in every share class, produced positive returns as measured in Norwegian kroner. Yes, we had to wait until December for that conclusion, but that's how financial markets work. Returns come in leaps and bounds and, in 2020, we had leaps and bounds aplenty.
If you care to read this comment, you don't need me to expound on vaccines, monetary stimuli or policies that but a few years ago would be termed fiscal profligacy. Do note, though, that lower levels of interest rates imply more unflappable investors; mathematically, movements in the near future make up a smaller part of the present value of all future returns. Pit this against a pandemic and increased sensitivity to changes in interest rates and you have a year that looks very much like 2020.
“Returns come in leaps and bounds and, in 2020, we had leaps and bounds aplenty.”
Given the enormous human cost of the pandemic, I will resist the temptation to write something along the lines of all's well that ends well. We dare say we are pleased, however, that our clients have fared so well – financially – in this very demanding year. Most of them had the audacity to stay put, meaning that they eventually recovered their losses and then some.
In terms of returns only: Thank God we didn't know!
Finn Øystein Bergh
Chief Economist & Strategist
Historical returns are no guarantee for future returns. Future returns will depend, inter alia, on, market developments, the portfolio manager’s skill, the fund’s risk profile, as well as fees for subscription, management and redemption. Returns may become negative as a result of negative price developments. This is marketing communication.