Weak global growth is the forgotten normal, says Vanguard economist

Joe Davis says valuations should be more important to investors than economic metrics.

Jess Morgan 3 October, 2016 | 5:00PM

In an environment of low returns, a broadly diversified portfolio is more important than ever, according to Vanguard’s global chief economist Joe Davis. He says investors should take a cue from his team at Vanguard and adopt a "global mindset" to their portfolios.

"It's natural to want to retract from investing overseas when you see some of the geopolitical headlines or some of the weakness overseas," says Davis, who is based in Philadelphia. "However, I think that's all the more reason to have a globally diversified portfolio. I think investors are increasingly embracing that. But these are the sort of environments that kind of test that resolve."

Patience is the key for long-term investors, Davis says: "A balanced portfolio will have lower expected returns, and somehow we're going to have to react to that. So this patience is just saying, listen, the market doesn't care necessarily what we want. It's just going to provide what you think is a realistic return. Odds are that they are going to be lower than the past 10 years."

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About Author

Jess Morgan

Jess Morgan  Jess Morgan is the associate editor of Morningstar Canada’s website. She began her career as a television producer and freelance writer, often making appearances on TV and radio as a commentator on politics and culture. She holds a BA in communications from the University of Winnipeg and a diploma in Creative Communications from Red River College.

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