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2021 Capital Market Expectations


The Anfield Investment Committee has completed stage three of our four-part annual forecasting process—setting our capital market expectations (CMEs) for 2021. As we have mentioned in the past, we construct portfolios built for a variety of time horizons—our fixed income portfolios are designed with a 1-3 year time horizon, our balanced portfolios are constructed with a 3-5+ year time horizon, and our most aggressive portfolios are constructed with a 7+ year time horizon.


Due to the extremely uncertain environment, we find ourselves in currently, the team has decided to keep our forecasts short in duration vs. the forecasts given last year, which were for a 3-5 year annualized returns for equity sectors (e.g. US Large Cap, Emerging Markets, etc.), while continuing to provide one-year forecasts for various fixed income and alternative markets (e.g. real estate).


In addition, we do not believe market participants (both buy-side and sell-side, and including our own team!) have a crystal ball that allows for accurate, precise forecasts of what equity markets will do over the next 12 months. Although this year many do seem to be positive, if not exuberant in their prognostications. For example, a list of Wall Street S&P 500 price targets for 2021 (Source: CNBC) shows the wide variation and opinions you may find depending on the firm you align with—firms like Morgan Stanley and BAML are generally positive on equity market returns (albeit barely). On the other side of the spectrum are firms like JP Morgan and Goldman Sachs, who are anticipating double-digit equity market returns. One common thread, in contrast to 2020 predictions, is that analysts are generally very positive on returns this year; it just varies as to the degree of their confidence.


Our own forecasts (which can be seen below) show a strong favorability towards U.S. Large Cap, U.S. Small Cap, and Emerging Markets on the equity side of the ledger, with US High Yield and Emerging Markets looking to be the areas of strength in fixed income markets this year. We used a simple ranking to illustrate where our team believes the best performance will come from (relative to each other) during 2021.


It should be noted that the fixed income markets look to be strained in 2021. While we have U.S. High Yield as our top fixed-income area, the potential returns are in the mid-single digits, while Treasuries could have a negative year.



In summary, the Anfield team believes 2021 will be a strong year for the equity market and a difficult year for fixed income markets to end up in the green. With the anticipation of additional stimulus into the markets and what is hopefully an improvement in vaccine distribution, risk assets should benefit. In contrast, with yields continuing to be at all-time lows and the increased debt supply, fixed income markets may have a tough 2021.


Anfield Capital Management, LLC is a registered investment adviser with the SEC. This report is for informational purposes only and does not constitute advice, an offer to sell, or a solicitation of an offer to buy any securities and may not be relied upon in connection with any offer or sale of securities. The contents of this report should not be relied upon in making investment decisions. The information and statistical data contained herein have been obtained from sources that we believe to be reliable but in no way are warranted by us as to accuracy or completeness. The accompanying performance statistics are based upon historical performance and are not indicative of future performance. The types of investments discussed do not represent all the securities purchased, sold, or recommended for clients. You should not assume that investments in the securities or models identified and discussed were or will be profitable. Results of the models do not reflect the performance result of any one client. Not all clients have experienced this specific return level. Actual client returns may differ materially from the performance of the models due to actual fees incurred by clients, timing of cash flows, or client restrictions (e.g., restrictions on specific securities, industries, or types of securities). Clients who invested in the models after our initial trade date for any security may have experienced materially different performance and may have lost money.

While many of the thoughts expressed in this report are stated in a factual manner, the discussion reflects only Anfield Capital’s beliefs about the financial markets in which it invests portfolio assets following the models. The descriptions herein, are in summary form, are incomplete and do not include all the information necessary to evaluate an investment in any model. The models described represent current intentions. However, Anfield Capital may pursue any objectives, employ any techniques, or purchase any type of financial investment that it considers appropriate for the models and in the best interests of its clients.

Any prior investment results or returns are presented for illustrative purposes only and are not indicative of future returns. An investment in the models presented herein involves a high degree of risk and could result in the loss of your entire investment. Investments with Anfield are subject to significant risks, which include, but are not limited to, the risk of loss of principal, lack of diversification, volatility, and market disruptions. Prospective investors are referred to our Form ADV 2A for a more detailed discussion of risk factors, which can be (a) found on the SEC's Investment Adviser Public Disclosure website at: http://adviserinfo.sec.gov, or (b) provided upon request. You should not construe the contents of this report as legal, tax, investment, or other advice. No representation, warranty or undertaking, express or implied, is given as to the accuracy or completeness of the information or opinions contained herein by Anfield Capital, its employees and no liability is accepted by such persons for the accuracy of completeness of any such information or opinions. Registration as an investment adviser does not imply a certain level of skill or training and no inference to the contrary should be made.

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