Video: Talking Global Issues with Clients

By 2017-05-09 00:00:00

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Bruce Love, Managing Editor, FA-IQ

“Krishna, of course the world isn’t just the U.S. What are some important global macro or international market considerations for advisors and clients?”

Krishna Memani, CIO, OppenheimerFunds

"So, I think the key thing to remember in this regard is U.S. economy has been growing at a reasonably rapid clip relatively speaking, 2%. And maybe we go from two to three percent, U.S. markets will do well.

“But the real surprise has been in the European economy. Everyone had given up on Europe. We had left it for dead. And Europe is really surprising on the upside. So, as we go through the political process in Europe, with elections and things like that over the next few months, beyond that things look really good for Europe.

“Same thing with emerging markets. Emerging markets, people were expecting China to blow up. That didn’t happen. Instead, certain emerging markets, like Brazil, Argentina, are on the verge of getting to the growth path in a very rapid way.

“So opportunities in emerging markets are quite substantial, as well. You just have to be very selective in emerging markets.”

Bruce Love

"So, Rocco, just how much do clients consider global issues, do you think?”

Rocco Papandrea, Senior Vice President-Wealth Management, Merrill Lynch

"Well, I think it’s, in this global environment, it’s on everyone’s minds. Last year we had a surprise with Brexit. Again, with the media, it’s the first thing that clients see. Immediately they want to speak to their advisor and really get a good understanding as to how does that affect them.

“But I think a key thing moving forward we see that the U.S. has led through a global recession and now the rest of the world is following. Again, low interest rates in Europe have helped propel those particular markets and we’re continuing to increase our exposure in those particular areas, as well as in the emerging markets. So we have overall increased our international exposure for clients to make sure they have a well-balanced portfolio.”

Bruce Love

"AJ, are global considerations there with your clients? Are they thinking about these things?”

Anupam Johri, Executive Director, Wealth Advisor, Morgan Stanley Wealth Management

"Yeah, we always try to have a conversation about the global situation because, as you said, that—I mean, U.S. is not alone. We have a large global economy. One fact that I’ve always liked to share with my clients, the car ownership rate in the U.S. is about 80%. Which is like a benchmark. The car ownership rate in India is 2%, in China it’s 6%. And these two countries make up about 35, 36% of the global population. So, although these things are happening other places, but they are meaningful for companies in the U.S., like General Motors or Ford.

“So I always like to share this with the clients that it is important for them and their portfolios to keep the global situation in their mind while they’re making decisions about their portfolios, although they are here.

“So it is very important and we do try to allocate portions of the portfolio to other parts of the world, also.”

Foreign investments may be volatile and involve additional expenses and special risks, including currency fluctuations, foreign taxes and geopolitical risks. Emerging and developing market investments may be especially volatile. Eurozone investments may be subject to volatility and liquidity issues.

These views represent the opinions of OppenheimerFunds, Inc. and are not intended as investment advice or to predict or depict the performance of any investment. These views are as of the publication date, and are subject to change based on subsequent developments.

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