Which markets or industries do you see perform best in the next decades (geographic vs. industry focus vs. cap size)? How do you build this into a strategy and portfolio to maximize expected risk-adjusted future returns?

I often get confused when people here argue whether one could beat "the market". Which "market" are they referring to? Assuming Equities, which equities and index? MSCI World? S&P500? FTSE100? ASX200? Emerging markets?Many portfolios suggested here seem to suggest a strong U.S. bias for equities, and even an MSCI world would have almost 40% U.S. equity exposure. While it's true that the S&P500 has had strong past returns over many time periods, there's plenty of research suggesting that over the same periods other markets have outperformed.Let's assume for a minute that "the market" is the S&P500 (or MSCI world index, irrelevant for my point). In times of low-cost ETFs widely available and being able to shift the weightings of one's portfolio relatively easily to replicate a strategy, I think it makes sense to compare this reference index and their risk adjusted returns to other indices along different dimensions. For equities, the obvious ones are

Now obviously past performance does not predict future returns, but it's one data point and can be considered alongside other factors. These include current valuations of such markets or sectors (particularly when it comes to investing lump sums at a certain point of time) and more importantly larger themes such as changes in political landscapes and the geopolitical environment, climate change and shift towards renewables, urbanization (or de-urbanization due to COVID?), digitization, etc.With a lot of data on past performance of different indices available and reflecting on major socioeconomic and political trends that will shape our lives in the next decades, I'd be interested in creating a diversified portfolio using low-cost ETFs, which over the next 20-30 years is likely to outperform the classic bogleheads 3-fund portfolio or an MSCI world and potentially offer higher risk-adjusted returns compared to those indices. Suggestions should be evidence-based on a combination of past returns and outlook into the future, rather than saying "just put your money into FANG or an AI or ROBO-ETF".With that in mind, which mix of markets, or sectors, do you see outperforming over the next decades compared to a S&P500 or MSCI world reference index, how would you build a low-cost portfolio based on that strategy, and with which weightings? Let's discuss!

submitted by /u/niknikniknikniknik1
[link] [comments]

source https://www.reddit.com/r/StockMarket/comments/ghfpme/which_markets_or_industries_do_you_see_perform/

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s