Despite the pandemic, uncertainty around American elections and Brexit, this year has proven to be a good one for investors.
Investors need to know what to avoid as much as figuring out what will make them money. But predicting what has happened this year was an impossible task, and one we set financial experts in December 2019. It is of little surprise few had success (see below).
Much is still unclear for 2021, with Brexit, the hangover from the pandemic and a new American president likely to have an impact on markets.
Despite the patchy performance of our experts, Telegraph Money thought it would be unfair to judge them on 2020. Here we have another go and figure out what not to buy in 2021.
Government bonds
Mike Bell, of JP Morgan Asset Management, said that the worst asset to own in 2021 would be government bonds. “They offer next to no income and offer the prospect of losing money in the coming year,” he said.
Although some predict central banks may need to raise interest rates, Mr Bell said that both stock market and the housing market would be vulnerable to such changes, making this unlikely.
Instead, he said they will keep rates low in an effort to stimulate economic growth meaning bonds will fail to provide much of an income for some time.
“As the economy recovers, inflation is likely to be higher than government bond yields for several years, meaning investors will lose money when account for inflation, known as real returns,” he said.
If inflation eventually picks up by more than the central banks are comfortable with then interest rates might have to rise, hurting government bond returns further, he added.
