Russell Investments' 10 key global investment themes for 2010

AUCKLAND - 12 January, 2010: Without question 2009 tested resolve and discipline as investors weighed the probability of financial market collapse against the prospects of global recovery. We're now in for another interesting, but more complicated, year as the global economy transitions from recovery to an uncertain longer-term trend.

The good news is that this transition year of 2010 should be less challenging from a market-direction perspective. And, while the 'once in a lifetime opportunities' offered in credit and equities markets 12 months ago have faded, valuations on some corporate bonds and shares remain modestly attractive.

The coming year will be dominated by a range of competing influences that will prompt more asset return volatility, but this should occur against the backdrop of an improving economy and a generally positive market outlook.

Influences variously include:

• concerns and uncertainty about large national deficits globally
• exit strategies for central banks from unprecedented policy settings
• how best to take advantage of opportunities in emerging markets
• if global recovery and emerging market opportunities will put upward pressure in commodity prices

Although opportunities in 2010 may be less compared to last year, Russell believes a valuable lesson can be observed in the principle of discipline and process in investment decision making. In 2009, the worst outcomes were suffered by those who panicked and lost their investment discipline early and missed the subsequent market rebound.

Successful investors stood out due to their rebalancing discipline and the use of rigorous decision making processes to take advantage of opportunities.

In its global market outlook '10 for 2010', Russell's investment strategist Andrew Pease outlines 10 investment themes for 2010 and warns that while it may be tempting for investors to take action, patience and prudent risk taking will win in 2010.

Russell's ten key themes for 2010 as follows:

1. The shape of things to come (pattern of economic recovery)
2. Zimbabwe or Japan (inflation)
3. Interest rates – low for really, really long (monetary policy)
4. Look out for leverage (credit creation)
5. No more easy credit (corporate credit)
6. Let the grandkids pay for it (fiscal stimulus)
7. Year of the tiger (influence of Asian economies)
8. Commodities – mind the gap (commodity prices)
9. Don't write off the greenback (dollar strength)
10. Much patience required (investor behaviour)