Four Top Fund Managers Advise Caution in 2018

A recent Bloomberg article shares market insights from six of the world’s top fund managers, four of which are “asking their clients to be cautious in 2018.”

The four with cautious outlooks are:

Scott Minerd, chief investment officer at Guggenheim Partners (manages $240 billion), is betting that the next recession is most likely going to occur in late 2019 to mid-2020. Minerd’s firm argues that current macroeconomic conditions are similar to those that existed 18-24 months prior to past recessions (citing an overheated labor market and expected rate increases by the Fed as contributing factors).

Howard Marks, co-chairman of Oaktree Capital Management (manages $100 billion in assets), advises caution due to:

  • Uncertainty concerning secular growth, central bank actions, political and geopolitical issues;
  • Elevated asset prices;
  • Pro-risk investor behavior.

Bill Gross, fund manager with Janus Capital (manages $190 billion) believes that prior market peaks allowed fund managers to partially protect their risk assets by purchasing Treasuries, but that today’s low interest rates limit such a strategy.

Jeremy Grantham, co-founder of Boston-based GMO (manages $120 billion), is bullish on the emerging markets front. Grantham argues, according to the article, that the natural resource cycles have turned, global economies are doing well, and oil prices are likely to rise for the next three years.

The following two managers are more upbeat:

Jeff Gundlach, founder of Doubleline Capital (manages over $100) argues that 45 countries showed accelerating growth in 2017, a record since before the 2008 financial crisis. Gundlach says that economic data continues to “surprise to the upside” and that he does not see signs of recessionary indicators.

Richard Turnill, global chief investment strategist at BlackRock (nearly $6 trillion under management) is also upbeat, citing strong U.S. earnings momentum and corporate tax cuts as positives as well as sustained economic expansion in Europe.