Global economic growth and benign inflation provided an extremely supportive environment for
risk assets in 2017. As the year progressed, deregulation and anticipation of tax reform in the U.S.
brightened investor sentiment even more. Although the Federal Reserve continued to raise short-term
interest rates, its gradual course and the accommodative policies of other global central banks helped
keep long-term rates in check, resulting in a flattening of the yield curve.
Emerging market equities led in 2017, propelled by strong earnings growth, appreciating currencies and capital inflows. Growth handily
outpaced value, and convertible securities participated in a substantial portion of the equity market’s upside. Within the fixed income asset
class, high yield bonds generated healthy returns for the year as confidence in the economy grew and spreads tightened.
FIGURE 1. GLOBAL ASSET CLASS PERFORMANCE, 4Q 2017 & YTD
Past performance is no guarantee of future results. Source: Morningstar and Bloomberg. Data shown in USD unless otherwise noted.