A selective, diversified and flexible approach to growth opportunities in both equity and fixed income markets may be a prudent course of action in 2018, as the prices of many financial assets already reflect general economic optimism. 
 


 

WHERE DO WE GROW FROM HERE?

Fixed Income Active Management

M&A and Global Growth

Positive economic news is generally reflected in U.S. equity valuations, which are elevated, but not unprecedented. Potential opportunities for growth may lie in companies (large and small) that may benefit from M&A activity and improving global growth.

Fixed Income Active Management

International Equities

Improving growth outside of the U.S. and lower valuations in many non-U.S. equity markets (both developed and emerging) may be the catalyst for attractive relative returns from international markets, which have underperformed the U.S. in recent years.

Fixed Income Active Management

Select Fixed Income Sectors

Credit sectors and emerging markets debt may provide opportunities for bond investors who are willing to embrace an active, flexible investment approach focused on fundamentals at the issuer and individual security level.


 


 

INTERNATIONAL STOCKS MAY REPRESENT GROWTH & DIVERSIFICATION OPPORTUNITIES

 

Major international indexes: Lower valuations & correlations relative to the S&P 500

International Stocks


Source: Bloomberg, as of 12/31/2017. International investments are subject to special risks, including currency fluctuations and social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets. Past performance is no guarantee of future results. This chart is for illustrative purposes only and does not represent an actual investment. Unmanaged index returns do not reflect any fees, expenses or sales charges. Indexes are unmanaged and investors cannot invest directly in an index. The forward P/E ratio is a stock’s (or index’s) current price divided by its estimated earnings per share (or estimated index earnings), usually one year ahead. Correlation is a statistical measure of the relationship between two sets of data. When asset prices move together, they are described as positively correlated; when they move opposite to each other, the correlation is described as negative or inverse. If price movements have no relationship to each other, they are described as uncorrelated.


 

THE PATH TO GROWTH IN 2018 MAY WARRANT ALLOCATION ACROSS MULTIPLE SOLUTIONS

 

Diversification does not guarantee a profit or protect against a loss.

IMPORTANT INFORMATION: Past performance is no guarantee of future results.  Performance shown excludes sales charges, if any. Had sale charges been included, performance would be lower. The "% Change" column(s), indicate a change in the Net Asset Value (NAV) or Market Price from the previous business day. All investments involve risk, including loss of principal. Please see each product’s web page for specific details regarding investment objective, risks, performance and other important information. Review this information carefully before you make any investment decision. Additional share classes and products may be available. 

 

 

Featured Resources

 

Mergers and acquisitions (M&A) is a general term used to refer to the consolidation of companies. A merger is a combination of two companies to form a new company, while an acquisition is the purchase of one company by another in which no new company is formed.


Developed markets refers to countries that have sound, well-established economies and are therefore thought to offer safer, more stable investment opportunities than developing markets.

Emerging markets are nations with social or business activity in the process of rapid growth and industrialization. These nations are sometimes also referred to as developing or less developed countries.

The S&P 500 Index is an unmanaged index of 500 stocks that is generally representative of the performance of larger companies in the U.S.

The MSCI EAFE Index is an unmanaged index of equity securities from developed countries in Western Europe, the Far East, and Australasia.

The MSCI Emerging Markets (EM) Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets.

The MSCI Japan Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of Japan.

The MSCI Europe Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in Europe: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.

IMPORTANT INFORMATION: All investments involve risk, including loss of principal. Past performance is no guarantee of future results. An investor cannot invest directly in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges.

Equity securities are subject to price fluctuation and possible loss of principal. Fixed-income securities involve interest rate, credit, inflation and reinvestment risks; and possible loss of principal. As interest rates rise, the value of fixed income securities falls. International investments are subject to special risks including currency fluctuations, social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets.

The opinions and views expressed herein are not intended to be relied upon as a prediction or forecast of actual future events or performance, guarantee of future results, recommendations or advice.  Statements made in this material are not intended as buy or sell recommendations of any securities. Forward-looking statements are subject to uncertainties that could cause actual developments and results to differ materially from the expectations expressed. This information has been prepared from sources believed reliable but the accuracy and completeness of the information cannot be guaranteed. Information and opinions expressed by either Legg Mason or its affiliates are current as at the date indicated, are subject to change without notice, and do not  take into account the particular investment objectives, financial situation or needs of individual investors.

Active management does not ensure gains or protect against market declines. 

Diversification does not guarantee a profit or protect against a loss.

Investments in small-cap and mid-cap companies involve a higher degree of risk and volatility than investments in larger, more established companies.

Outperformance does not imply positive results.