Capital Markets Summer 2020

Key Observations and Themes

Lasting Change The pandemic has impacted us all and as a result it has changed the economic environment. We believe that understanding these shifts is important in identifying successful investments for the future.

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I

Lending vs. Owning With interest rates at very low levels, stocks look attractive relative to bonds. We believe equities will outperform fixed income over the long term.

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II

Accelerating Innovation Innovation is speeding up and changing the way the economy behaves, increasingly driving stock performance.

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III

The Election In our view, evidence suggests investing in innovation and fundamentals is likely to outperform strategies that attempt to profit from policy changes.

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IV

Style Wars Powerful structural forces have caused Growth to diverge from Value. Investors looking for a reversion to the mean may be disappointed.

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V

Valuation Equity valuation looks more attractive after accounting for low interest rates and changing business models, which generate increased cash relative to earnings.

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VI

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