Citi Private Bank forecast increased focus on equities

In their outlook for 2014, Citi Private Bank has predicted that equities are solid bet for investors. They see the investment class outperforming fixed income for an extended period.

In addition, returns on risk adjusted equities in developed markets, especially in the United States and Japan, were strong in the previous year. Therefore, more moderate returns are expected this year. While recovery in the global economy remains stable, equity returns worldwide will be closer to 10% than 30%.

Despite the encouraging signs in developed markets, Citi does not expect similar results in emerging markets. They actually see a negative impact on emerging markets as the rates rise in developed markets.

Global fixed-income returns were close to zero in 2013 after a period of bond price appreciation and this is expected to continue in high-grade bonds, but perhaps reaching 4% in high-yield instruments.