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Quarterly Review: 2021 Opens with a Changing of the Guard

Cyclical Sectors Responded Well to Vaccines, Stimulus, and Pent-up Demand A little over twelve months ago, investors were looking for signs that the bull market and multi-year economic expansion were coming to an end. The onset of COVID-19 put an end to both, but now investors are focused on a new expansion and a new bull market with different dynamics. As we have navigated back and forth between optimism and pessimism, we have also seen leadership changes across asset classes and investment styles. The combination of massive amounts of global stimulus, accommodative central banks, and widespread distribution of the vaccine has helped fuel broader participation beyond just US large cap and growth sectors.

FAQ with RiverFront s Chief Investment Officers

Global Equity CIO, Adam Grossman & Global Fixed Income Co-CIO, Kevin Nicholson Since November, we’ve participated in many calls with financial advisors and their clients to talk about the implications of the election and how to think about markets in 2021. This week, we would like to highlight their most frequently asked questions and concerns because many of our readers are probably wondering about the same things. Specifically, I had the opportunity to sit down with our Global Equity CIO Adam Grossman, and Global Fixed Income Co-CIO Kevin Nicholson, to hear their responses to these frequently asked questions.  Some of the comments have been edited for brevity and clarity.

Quarterly Review: 2020 Ends Positive on A Positive Note

The year finished strong as investors look ahead to a 2021 recovery. Previously lagging sectors, such as Energy and Financials, were the best performers, we believe, due to growing expectations for a full re-opening of the economy. As the rotation towards recovery plays continues, we have increased our exposure to economically sensitive areas such as emerging markets. The Road to Recovery is Paved with Government Spending and Vaccine Approvals Finished the year strong: At the beginning of the fourth quarter, uncertainties surrounding the US elections, timing of vaccine approval, and above-average valuation levels left many investors questioning whether the rally off the March lows could be sustained. News of additional stimulus, improving economic metrics, and multiple vaccine approvals overshadowed those uncertainties. As a result, investors chose to focus on the road ahead rather than the rear-view mirror. Ultimately headlines gave way to recovering fundamentals, leading globa

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