Report highlights five post-pandemic portfolio ideas

Wells Fargo Investment Institute (WFII) today released its “2021 Midyear Outlook: Fuel for Growth,” calling for an intensified 2021-2022 U.S. economic recovery thanks to COVID-19 vaccines, expectations for accelerated spending of last year’s accumulated private savings, historically low interest rates, and the prospect of multiple government support programs. The report notes potential concerns about rising inflation rates, tax rates, and interest rates. Still, WFII believes these issues seem unlikely to douse the economic recovery or the opportunities outlined in the report at this early juncture in the recovery.

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Wells Fargo Investment Institute 2021 Midyear Outlook: Fuel for Growth (Photo: Wells Fargo)

“There is a powerful macro mosaic at work with a steadily weakening U.S. dollar, rising commodity prices, strong global equity returns, low interest rates, a robust fiscal stimulus push, and falling equity and bond volatility,” said Darrell Cronk, president of WFII and chief investment officer of Wells Fargo Wealth & Investment Management. “Strong market trends also can produce wide market divergences, making diversification and a disciplined plan to allocate cash valuable allies.”

The report provides insights about the global economy, equities, fixed income, real assets, and alternative investments. WFII expects the U.S. to lead a global economic boom that lifts world economic growth to a 48-year high this year before shifting to a still-strong but more sustainable pace over the course of next year. WFII believes that U.S. and global inflation will follow economic growth to exceed their pre-pandemic pace this year and next. The report anticipates that this vigorous economic recovery could support record corporate earnings in 2021 and 2022, sending equity prices to new all-time highs. The S&P 500 Index target range is 4,400-4,600 for year-end 2021 and 4,800-5,000 for year-end 2022.

The report highlights five post-pandemic portfolio ideas for investors to consider:

1. Consider putting cash to work selectively
2. Cyclical sectors and asset classes for consideration
3. Fixed income strategies
4. Commodity prices in an uptrend
5. Equity and alternative investment strategies

Download “2021 Midyear Outlook: Fuel for Growth” and watch a Wells Fargo Stories video.

Register for the WFII 2021 Midyear Outlook investor webcast on Thursday, June 17, at 4:15 p.m. Eastern time.

Risk Disclosures

Forecasts are based on certain assumptions and on views of market and economic conditions which are subject to change.

Different investments offer different levels of potential return and market risk. The level of risk associated with a particular investment or asset class generally correlates with the level of return the investment or asset class might achieve. Stock markets, especially foreign markets, are volatile. Stock values may fluctuate in response to general economic and market conditions, the prospects of individual companies, and industry sectors. Bonds are subject to market, interest rate, price, credit/default, liquidity, inflation, and other risks. Prices tend to be inversely affected by changes in interest rates. The commodities markets are considered speculative, carry substantial risks, and have experienced periods of extreme volatility. Investing in a volatile and uncertain commodities market may cause a portfolio to rapidly increase or decrease in value which may result in greater share price volatility.

Alternative investments, such as hedge funds, private equity/private debt and private real estate funds, are speculative and involve a high degree of risk that is appropriate only for those investors who have the financial sophistication and expertise to evaluate the merits and risks of an investment in a fund and for which the fund does not represent a complete investment program. They entail significant risks that can include losses due to leveraging or other speculative investment practices, lack of liquidity, volatility of returns, restrictions on transferring interests in a fund, potential lack of diversification, absence and/or delay of information regarding valuations and pricing, complex tax structures and delays in tax reporting, less regulation and higher fees than mutual funds. Hedge fund, private equity, private debt, and private real estate fund investing involves other material risks including capital loss and the loss of the entire amount invested. A fund's offering documents should be carefully reviewed prior to investing.

About Wells Fargo

Wells Fargo & Company (NYSE: WFC) is a leading financial services company that has approximately $1.9 trillion in assets and proudly serves one in three U.S. households and more than 10% of all middle market companies and small businesses in the U.S. We provide a diversified set of banking, investment, and mortgage products and services, as well as consumer and commercial finance, through our four reportable operating segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth & Investment Management. Wells Fargo ranked No. 30 on Fortune’s 2020 rankings of America’s largest corporations. In the communities we serve, the company focuses its social impact on building a sustainable, inclusive future for all by supporting housing affordability, small business growth, financial health, and a low-carbon economy. News, insights, and perspectives from Wells Fargo are also available at Wells Fargo Stories.

Additional information may be found at www.wellsfargo.com | Twitter: @WellsFargo.

About the Wells Fargo Investment Institute

Wells Fargo Investment Institute is a registered investment adviser and wholly owned subsidiary of Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company, providing investment research, strategy, manager research, and thought leadership within the Wealth & Investment Management division, with the goal of supplying world-class advice to the company’s financial and wealth advisers.

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