What does 2021 hold for the investment world? For a fund manager, that is a multibillion-dollar question. FTfm asked investment bosses and strategists at 10 of the world’s biggest asset managers to gaze into their crystal ball.

What should investors expect?The recovery will accelerate with the vaccine, but stop and go phases will persist. We expect further pressure on fiscal and monetary policy for more stimulus.

China and parts of Asia will lead the recovery, while the rest of the world will follow. With low rates and tight spreads, equities will be the place to go with the great rotation towards value set to continue.

We prefer Europe, Japan and emerging markets. With a record €18tn in negative yielding debt, the search for income will intensify. Emerging market bonds, private debt and real assets will be the place to look in the search for decent yield.

Biggest risk?The burst of the hypergrowth bubble. Valuations [for growth stocks] may not seem excessive compared to US Treasuries, but rising bond yields will reveal who is swimming naked in the pool.

Biggest opportunity?Emerging market equities are our top choice, but selection and rotation of themes will be important. Asia first, followed by Latin America and CEMEA [Central and eastern Europe, Middle East and Africa] using a balance between growth and value.

Quirkiest prediction?Frontier markets will be the winners. They trade at a wide discount to emerging markets. Our choices are Vietnam, for its hub positioning, and Kazakhstan as a significant beneficiary of the New Silk Road.

Where will the S&P 500 be at year end?About 4,000 is achievable assuming the tech bubble does not burst.

What should investors expect?We are bullish on risk assets for 2021 with an expected vaccine-led acceleration of the global economy. This has now become consensus. But we think there is more to the story. What makes us different?

First, we believe traditional business cycle logic doesn’t apply to the virus shock, which is more akin to a natural disaster. 2021 is not simply about a typical broad-based cyclical recovery — it will be about picking sectors amid an uneven restart.

Second, we think we are entering a “new nominal”. The macro policy revolution implies a muted response of central banks to rising inflation. The resulting combination of stable low yields with rising inflation will support equities.

Biggest risk?We see two major near-term risks. On the downside, significant delays in the deployment of effective vaccines that could make it harder to prevent longer term scaring. On the upside, an unleashing of pent-up demand that takes markets by surprise.

Biggest opportunity?Take a sectoral approach. We like global tech and healthcare due to the pandemic’s transformative shifts — and balance this with prime beneficiaries of the economic restart, such as emerging market equities.

Quirkiest prediction?Real rates continue to fall even as an accelerated restart implies near-term quarterly growth rates that will seem outsized compared to a usual recovery.

Where will the S&P 500 be at year end?We have upgraded US equities to overweight. We see the tech and healthcare sectors offering exposure to structural growth trends, and US small-caps geared to an expected cyclical upswing in 2021.

What should investors expect? We expect the global economy to enter a restoration phase, although the pace of recovery will vary by region. This will depend on how much output was lost in 2020; how quickly vaccines are rolled out; and the degree of policy support.

The high level of policy uncertainty seen in recent years is also likely to decline, with the US taking a more multilateral approach to global issues and “lower-for-even-longer” interest rates as central banks attempt to push inflation higher.

However, investors need to be realistic about the returns that can be achieved this year, given the strong market performance in 2020.

Biggest risk? Uncertainties around the pandemic remain substantial, particularly how quickly vaccines can be rolled out. The market has priced in a lot of good news on this front in recent weeks.

Biggest opportunity? In a year of restoration, allocating to equities still makes sense, but we need to be dynamic in managing regional exposures. Emerging Markets fixed income should benefit from a weaker dollar.

Quirkiest prediction? The diversification properties of government bonds could deteriorate further. There is a strong case to look for alternative diversifiers, including illiquid alternatives such as securitised and private debt, or multi-strategy hedge funds.

Where will the S&P 500 be at year end?There is scope for US stocks to make further gains. Significant tech and quality exposure remains a positive, while cyclical parts of the market can potentially benefit from fiscal stimulus measures. However, we need to be realistic about the scale of returns, given valuations are no longer cheap.

What should investors expect? The stock market will largely look through Covid-related economic headwinds in the very near term to the broad distribution of vaccines, which should be the catalyst for a strong economic recovery.

That means equities should outperform fixed income as growth moves above trend, the global earnings cycle recovers and risk assets are supported by ample money supply growth. I expect this environment to favour cyclical and smaller capitalisation stocks.

I also expect that the economic expansion, positive fundamentals and accommodative policies will continue to generate positive credit conditions over the next year.

Biggest risk? While this is extremely unlikely, I believe the biggest risk to the stock market is central banks, especially the US Federal Reserve, removing accommodation too soon.

Biggest opportunity?An improving risk appetite, a depreciating US dollar and better control of the virus should lead to outperformance in Asia emerging markets in 2021.

Quirkiest prediction? Cryptocurrency history repeats itself. After its massive rally in 2020, Bitcoin falls hard in 2021 just as it did in 2018.

Where will the S&P 500 be at year end?4,350

What should investors expect?Even though the world economy’s immediate prospects may have darkened, growth could still be strong in 2021. This is because the rollout of safe and effective vaccines could accelerate a return to something approaching normality.

We believe this fundamental backdrop should boost equity markets in particular, as investors start to see a potential end to the economic and social hardship of the past year.

In fixed income, we continue to believe in our “lower for longer” theme, seeing limited upside potential for government bond yields. Low yields, easy monetary policy and a recovering economy also provide a supportive backdrop for credit.

Biggest risk?Premature fiscal and monetary tightening. China appears keen to rein in excessively loose policy following another huge credit expansion, and will probably have to tread a tightrope to avoid market stress.

Biggest opportunity?We expect investors increasingly to stress-test their portfolios for climate change and align to particular temperature outcomes. The opportunity is to stay ahead of this massive trend.

Quirkiest prediction?Despite secular headwinds from the energy transition, oil could see a strong rally in 2021 as the economy rebounds and cheap prices temporarily encourage energy inefficiency.

Where will the S&P 500 be at year end?The S&P’s strength in 2020 has been driven by a handful of tech stocks. We still like this sector, and the index, given strong earnings — but sentiment risks becoming overly exuberant.

What should investors expect? 2021 will be a year of economic normalisation as individuals slowly come out of “hibernation”. Although equities have rallied strongly in 2020, we still see opportunity in more cyclical sectors and countries. Bonds, on the other hand, offer little value, particularly in Europe.

We also view Covid-19 as “the great accelerator” as it has accentuated some pre-existing themes, which remain in place for 2021. For example, energy transition as governments focus on “green infrastructure”, climate change more broadly and technological disruption.

Biggest risk? Although fiscal stimulus is acting as a bridge to better times, the longer we struggle to get the virus under control, the more likely we are to experience private sector scarring.

Biggest opportunity?A rise in inflation, accompanied by steeper yield curves, would prompt a significant rotation in markets, unleashing pent-up return potential in some of the more “value-driven” areas of the market.

Quirkiest prediction?Reports of the US dollar’s demise are greatly exaggerated. I will keep some dollars up my sleeve in 2021 as they are a reliable haven and US assets remain attractive.

Where will the S&P 500 be at year end?4,000

What should investors expect?We anticipate a strong global economic recovery, as vaccine deployment allows pent-up demand in service industries to materialise. But that strong headline figure will obscure considerable differences across countries and sectors. Momentum will fluctuate notably over the course of the year.

We are watching for signs of vulnerability and bubbling volatility, especially as the global economy progresses toward the next phase of the recovery: the transition to autonomous growth, in which underlying demand will have to compensate for the gradual withdrawal of policy support.

We see the strongest prospects for economic growth in North America and in China, which will warrant particular attention from investors.

Biggest risk?Inflation data is likely to surprise, given year-over-year comparables, leading to a market reassessment of underlying inflation risk with potential for a back-up in rates and equity market re-rating.

Biggest opportunity?A robust recovery could trigger a rally that expands to include some of the most unloved value stocks. Investors may also start to take notice of value companies’ recent efficiency improvements, which in turn could drive a more durable value rally.

Quirkiest prediction?With money flowing abundantly, scarce assets will be in demand. Investors will look far beyond conventional choices like gold; expect them to bid up cryptocurrencies.

Where will the S&P 500 be at year end?3,900, driven by an earnings reset.

What should investors expect? With the uncertainty around the US election over, we will enter the expansionary phase of the business cycle in 2021. Despite the Covid-19 pandemic continuing to suppress the recovery, support through monetary policies and fiscal stimulus measures will boost the global economy.

Many companies are in good shape, having adjusted cost structures and strengthened cash reserves in response to the economic slowdown. As business activity gets back to normal, we expect increasing opportunities for M&A and share buybacks.

In Japan, digitalisation and decarbonisation, two key objectives for prime minister Yoshihide Suga, will drive the economy. Stronger profits delivered by improved corporate governance will be another tailwind.

Biggest risk? Central banks are keeping the world economy afloat. Once they signal they are beginning to taper, the prospect of rapid inflation and long-term interest rate rises will loom large as potential risks.

Biggest opportunity? Pressure for action on climate change will only increase, creating opportunities for investors in green technology and other innovative methods to cut emissions.

Quirkiest prediction?The relationship between the US and China may begin to thaw as a result of the need for joint action on climate change, although tensions will continue, especially over the tech industry.

Where will the S&P 500 be at year end? With an expansionary business cycle and strong corporate earnings, the S&P 500 will reach 4,200 by the end of 2021. Elevated equity [valuation] multiples should prove resilient as the low-interest environment is likely to persist. The excess cash held by businesses and higher consumer saving will continue to support equity markets.

What should investors expect?Widespread availability of coronavirus vaccines by the second quarter, further fiscal stimulus and continued easy monetary policy will support the economic recovery and enable corporate earnings in most regions to recover to pre-pandemic levels by the end of the year.

Although some economic recovery is priced in, we see further upside for global equities and expect the more economically sensitive markets and sectors, which underperformed for much of 2020, to outperform in 2021. Our preferred areas include small- and mid-caps, select financial and energy names, and UK equities.

Biggest risk?The biggest risk would be a mutation in the coronavirus that renders the various vaccines ineffective. This would threaten to take us back to square one in dealing with the pandemic.

Biggest opportunity?Investing in 2020 was about going resilient, large and American. 2021 will be about going cyclical, small and global as the stocks most affected by the pandemic continue to revive.

Quirkiest prediction?We expect the recovery to lift commodity producers’ currencies, notably the Russia rouble, Australian dollar, Norwegian krone, and Canadian dollar.

Where will the S&P 500 be at year end?The backdrop for stocks looks favourable, with a revival of corporate profits and continued policy support from the Fed. We see the S&P 500 at 4,000 by the end of 2021.

What should investors expect?Health outcomes will drive the economy as the virus continues to influence the trajectory of the recovery. As vaccination efforts proceed and we get closer to herd immunity, labour market scarring and business bankruptcies (which have remained low) will take centre stage after output gaps begin to close.

Longer-term, we expect the post-virus global economy to look like it did before the virus. We expect inflation to rise in early 2021 due to base effects, but not to persist. Our market outlook is one of lower returns for the next decade due to high valuations in equities and lower interest rates in fixed income.

Biggest risk?Near-term, the biggest risks are the health outcomes and the pace of vaccination. Longer-term, our outlook hinges on globalisation trends, productivity growth and the output gap. Biggest opportunity?Long-term focus and disciplined asset allocation are as important now as they ever were. We see opportunities for equities outside the US and value stocks to outperform over the next decade.

Quirkiest prediction?Inflation will stay low and the major central banks will have difficulty meeting their inflation targets. Where will the S&P 500 be at year end?Difficult to predict, but current valuations are above our fair value range. We continue to see upside in non-US equities due to higher valuations and slower earnings growth in the US.