Investors will face “a rocky road” in the second half of 2012 compared with the first few months of the year, according to Russ Koesterich, global chief investment strategist for BlackRock’s iShares business.

Date: June 29, 2012

Tags: BlackRock, Asset allocation

Investors will face “a rocky road” in the second half of 2012 compared with the first few months of the year, according to Russ Koesterich, global chief investment strategist for BlackRock’s iShares business.

In particular, Koesterich said investors might be under-estimating the possible impact of the US fiscal cliff. “Investor behaviour suggests that the risk is not currently discounted into asset prices,” he said.

"Due to Europe’s issues and the uncertainty surrounding US fiscal policy, we expect volatility to remain elevated,” he said. “We continue to advocate for a relatively conservative portfolio composed of high-dividend paying stocks and US ‘spread products’, such as investment-grade and municipal bonds.”

Koesterich’s mid-year outlook, entitled “What’s in Store for the Second Half of 2012”, outlines the major factors likely to shape market directions for the next six months and provides a near-term outlook for key global regions and asset sectors, with details of related iShares investment products.

Absent a worsening of the crisis in Europe, economic growth in the next six months should be broadly in line with the first quarter – positive but sub-par – with US growth around 2% and global growth from 3% to 3.5%, predicted Koesterich.