2021 Insights:
Making sense of a market transformed

Growing assets

China’s economic shift

WFAM Berkeley Street Emerging Markets Equity Team

The concept of “dual circulation” is embedded in China’s go-forward economic policy, but what does it mean? It amounts to supporting the continued rise of domestic consumption while becoming less reliant on foreign trading partners, encouraging the rise of Chinese brands to meet distinctly Chinese tastes.

Read about how China’s economic transformation is creating compelling investment opportunities across a number of sectors and companies.

The scarcity of growth

WFAM Heritage Growth Equity Team

The number of companies offering high levels of earnings growth has nearly halved in the span of less than a generation. Yet investors need growth and the capital appreciation it brings as much as ever. How do you find it?

Read on to find out how the WFAM Heritage Growth Equity team targets the most compelling growth opportunities in today’s markets.

Source: FactSet, as of 9/30/2020

The rebirth of U.S. manufacturing

WFAM Special Global Equity Team

Decisions about where to locate a factory are among the most difficult a corporate manager can make. In recent years, a number of factors have coalesced to support the business case for investment in U.S. production capacity, yet some companies are positioned better than others to exploit the opportunity.

In this article, the Special Global Equity team discusses the key trends that support a U.S. manufacturing renaissance and how it seeks to identify winners.

Generating income

Cast a wide net: Generating yield in a yield-starved world

WFAM Multi-Sector Fixed Income–Plus Team

A world characterized by low rates, high volatility, growing levels of negative-yielding debt, and overall declining bond yields has investors looking for ways to generate income. Fortunately, there’s a solution.

A multi-sector approach can be an effective way to pursue yield in such a climate because it offers flexibility to find additional sources of income.

Fiscal prudence: How to navigate municipals

WFAM Municipal Fixed Income Team

Have municipal investors been lulled to sleep by a strong technical environment and perceived issuer stability? Maybe, and here’s why…

2021 could see a greater degree of credit deterioration as municipalities battle the lingering effects of the pandemic on their balance sheets. However, this environment is setting up significant security selection opportunities for managers with deep credit research capabilities.

Source: Bloomberg, as of 10/31/2020

An anchor in the storm: Core fixed income

WFAM Montgomery Fixed Income Team

Bond markets have changed a lot in recent years. With yields so low around the world—and even negative in some markets—how can investors boost income (or yield) without taking on too much risk?

Active security selection and rotation to best ideas within stringent risk parameters can significantly improve risk-adjusted returns. In this article, the Montgomery Fixed Income team explains why.

Preserving assets

The stay-at-home factor: Understanding changes to U.S. equity and credit betas

WFAM Analytic Investors and Systematic Fixed Income Teams

Every so often in global capital markets, something unexpected happens that completely changes the rules of the game. A so-called game changer is a systemic shock that is large enough to spark a regime change and fresh thinking about how investors should measure and react to risk. We think such an event unfolded in 2020.

Analytic Investors provides a new perspective on how equity and credit risks have shifted following the arrival of the stay-at-home factor.

Source: Barra GEM3L Analytic Investors team as of November 2020

Stimulus: A bridge to recovery

WFAM Multi-Asset Solutions Team

The COVID-19 crisis was extraordinary and required extraordinary measures. Traditional monetary policy tools have helped prop up the economy, and credit support has kept credit flowing and avoided a financial crisis. However, the sea of stimulus can’t go on forever.

In this article, Brian Jacobsen takes a look at the various stimulus programs and considers what the future could hold for the economy once stimulus ends.

Retirement investing today: Managing risks while pursuing growth

WFAM Multi-Asset Solutions Team

Downturns are scary. When people see their nest egg shrink by more than 20% within just a few weeks, it’s difficult to keep a “stay the course” mindset. In today’s environment, a key concern for many is how to get their retirement savings back on track without taking on excessive risk.

Target date funds have gone a long way toward providing investors with diverse allocations and an appropriate balance of risks for a specific retirement horizon. Read how the Wells Fargo Target Date Funds have raised the bar in this space.

Source: Wells Fargo 2020 Annual Retirement Survey

Managing cash balances in a sea of liquidity

WFAM Money Market Team

Investors are always seeking to balance the competing challenges of maximizing investment returns and ensuring adequate safety and liquidity.

Read how the WFAM Money Market team uses three levers to:

  • Keep interest rate risk in check
  • Stay within investment-grade credit risk tolerances
  • Seek additional yield

Serious about sustainability

Virtual roundtable: Climate transition credit

Sustainable Investing

Sustainable investing has achieved a new prominence in efforts to confront tomorrow’s climate challenges. Urgent and strategic reallocation of capital is an important part of solving this problem.

Find out how our climate transition approach in fixed income is designed to decarbonize portfolios by 2050.

Take a deeper look

Learn more in the full report from Wells Fargo Asset Management, Making sense of a market transformed.

Download the report (PDF)

Making sense of a market transformed report cover

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