The main reason for the price increases in equity markets was that investors were willing to pay ever more for corporate earnings in 2019 – in other words, equity valuations increased in P/E terms, which is the price investors pay per unit of corporate earnings. In addition, equities got a flying start to the year, as prices corrected following significant price falls at the end of 2018.

In bond markets, returns were mostly driven by declining interest rates, which are synonymous with rising bond prices.

Our return expectations for 2020 are considerably more subdued. We still expect positive equity returns, but in single digits, while we expect limited returns from bonds.

Generally speaking, we are in the late phase of the global economic upswing, which in the US has lasted more than 10 years and is thus the longest upswing since World War Two. However, while the years of highest growth are behind us, the upswing probably still has some time to run.