Global markets continue to successfully navigate a maturing economic cycle. At our latest investment forum, our panellists discussed and debated some of the challenges facing investors as they navigate the later cycle.

Four key themes emerged from the forum:

Emerging market equities will continue to face some near-term pressure

Structural investment themes are attractive in emerging markets. However, the panel felt that the tightening of global credit conditions, as well as the uncertainty of rising protectionism and a potentially stronger US dollar, were headwinds to a tactically more positive view.

Global bond yields are still expected to move higher into 2019

A sharper-than-expected rise in interest rates was seen as a risk to the outlook, potentially driven by an unexpected jump in wage pressures. However, an ongoing steady move higher in yields in 2019 was expected to be the more likely outcome.

The domestic equity reporting season suggests prior aggressive cost-out gains had been exhausted

The reporting season delivered typically in-line results in 2018, but guidance was weaker than expected. A number of sectors were seen to have underinvested - or were facing rising labour cost pressures. Offshore markets, particularly Asia, were viewed as less expensive and presenting some better long-term structural opportunities than Australia.

Finding alternative investments that are genuinely not exposed to the market remains key in the later cycle

Managers of alternative assets are facing challenges given the wide range of potential scenarios that could unfold over the coming year. They also face challenges as bouts of volatility do not persist and style trends (such as growth versus value) continue for much longer than expected.