The global investment landscape has changed dramatically over the past few decades with financial globalization, the digitalization of economies, the rise of China and the development of alternative investments and asset classes. The recent historical trends are likely to provide enough insights to help us make educated guesses regarding the short- and medium-term investment opportunities and help investors adopt a truly global mindset. In this context, we examine the evolution of the Global Market Portfolio (GMP) over time. The GMP encompasses the universe of all investable assets and their market value at a given point in time. It represents the positioning of investors in aggregate and reveals insights regarding their attitudes and preferences. The GMP, therefore, could be considered as a natural benchmark for investors’ strategic asset allocations.
Issuance of new securities during 2020 was particularly impressive as both governments and corporations raised new funds to navigate through the unprecedented economic challenges posed by COVID-19. In 2021, given accommodating financing conditions and the very low cost of capital, total issuance remained strong with full year numbers expected to exceed those of 2020. Equity performance was particularly strong, outperforming bonds across many countries. Consequently, the weighting of individual asset classes in the GMP changed visibly and equity weighting continued to rise.
