We have been publishing a Medium-term Global Outlook since 2019. In each year, the team and I have deliberately aimed to look beyond the next 12 months, and instead focus on adding value to our clients and partners through the medium-term. This means we spend less time trying to forecast the near-term outcomes – although we remain aware of that shorter time frame when we construct our portfolios.

Our focus on the medium-term means that our research remains relevant for longer. We are less at the mercy of short-term market movements. Our medium-term calls can be very wrong in the near-term. 2021 was an example of this. Our medium-term call that China would be an important driver of alpha was painful in the context of the massive underperformance in Chinese equities over the year. Similarly in 2019 we wrote that a recession was likely over the coming 24 months. 2019 turned out to be a strong year for growth and for equities.

But a recession did take place in 2020, albeit not for the reason we expected. And the actions we recommended in 2019 and in 2020 – when we reconfirmed our view that a recession was likely – delivered substantial benefits to our clients through 2020 and 2021. I suspect that in time – and potentially sooner rather than later – China’s equity performance gap with the rest of the world will close and deliver the alpha we wrote about in 2021. As we move into 2022 and publish our fourth Medium-term Global Outlook, our focus is on addressing the challenges attached to a maturing economic cycle. While we have identified a range of new themes and actions, I would stress that this 2022 publication can be read in conjunction with the 2021 Medium-term Global Outlook. The recommendations we made last year, including using scenarios to reduce surprises and on understanding the role of sustainability in driving alpha, remain just as relevant today as they were a year ago. And we expect they will remain relevant through the coming medium-term.

The actions that we recommend in our Medium-term Global Outlooks are implemented by us for our clients and investors in a range of managed accounts in Australia and Asia. We have successfully built custom-made portfolios across risk profiles for clients, and we have opened our own “Active” range of portfolios – called Active Alpha, Active Beta Plus and Active Beta – to clients who want something to cater for their different client segments. The Active Alpha portfolios now have a three-year history, and the strong risk-adjusted performance highlights the usefulness of our Medium-term Global Outlooks.

We recommended in 2020 that investors should prepare for a shock, review the resilience of their portfolios, and position to reduce surprises. Investors who did so experienced strong risk-adjusted returns over the year.

We think 2021 represents the start of a new economic cycle. The outlook, as ever, is uncertain. We know investing naturally involves taking on risk. We believe investing should focus on adding value through the medium-term. In 2021, we turn our focus to sustaining returns for the future.

Sustaining returns for the future means being aware of a range of plausible economic scenarios over the medium-term. And using those scenarios to stress portfolios to reduce unintended risks. Sustaining returns for the future also means identifying significant themes that will have a material impact on medium-term potential returns. Our 2021 Oreana Medium-Term Global Outlook considers these key themes and makes a range of recommendations that we expect will help deliver sustainable medium-term returns.

Our 2021 Oreana Financial Service Medium-Term Global Outlook explicitly looks at sustaining returns for the future by focusing on five key themes that are important and implementable. Implementing any of these is a good starting point for asset allocators and investors.

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