Great expectations

Halfway through 2021, the prospect for a “normalized” environment continues to tantalize investors. This seemed to come to a head as stock markets paused in June when a consumer inflation report from the US Bureau of Labor Statistics showed a year-over-year inflation rate of 5%. Meanwhile, the debate over the permanence and impact of rising prices is heating up. This all forms the backdrop for this roundup of views and commentary on the capital markets.

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The views expressed represent the investment team's assessment of the market environment as of July 2021, and should not be considered a recommendation to buy, hold, or sell any security, and should not be relied on as research or investment advice. Views are subject to change without notice.

Investing involves risk, including the possible loss of principal.

Past performance does not guarantee future results.

Diversification may not protect against market risk.

International investments entail risks including fluctuation in currency values, differences in accounting principles, or economic or political instability. Investing in emerging markets can be riskier than investing in established foreign markets due to increased volatility, lower trading volume, and higher risk of market closures. In many emerging markets, there is substantially less publicly available information and the available information may be incomplete or misleading. Legal claims are generally more difficult to pursue.

Investments in small and/or medium-sized companies typically exhibit greater risk and higher volatility than larger, more established companies.

Narrowly focused investments may exhibit higher volatility than investments in multiple industry sectors.

Equity securities are subject to price fluctuation and possible loss of principal. As a class, equities carry higher risks than bonds or money market instruments.

Fixed income securities and bond funds can lose value, and investors can lose principal, as interest rates rise. They also may be affected by economic conditions that hinder an issuer’s ability to make interest and principal payments on its debt.

Fixed income investments may also be subject to prepayment risk, the risk that the principal of a bond that is held by a portfolio will be prepaid prior to maturity, at the time when interest rates are lower than what the bond was paying. A portfolio may then have to reinvest that money at a lower interest rate.

Investment strategies that hold securities issued by companies principally engaged in the infrastructure industry have greater exposure to the potential adverse economic, regulatory, political, and other changes affecting such entities.

Real estate investments are subject to many of the risks associated with direct real estate ownership, including changes in economic conditions, credit risk, and interest rate fluctuations.

Sector risk is the risk that government or regulatory authorities have, from time to time, taken or considered actions that could affect various sectors of these securities market.

Exposure to the commodities markets may subject the investments to greater volatility than investments in traditional securities.

An investment in natural resources securities may subject a portfolio to the risk that the investment will perform poorly during a downturn in the natural resource sector.