Euan Munro, chief executive of Aviva Investors, said: “The return of volatility to global financial markets in recent months reflects a key inflection point. The long journey towards a zero-interest-rate world provided a significant tailwind for all financial assets, making it relatively easy to secure healthy returns.
“We believe that period is coming to an end and investors now face the challenge of generating reliable capital growth or income in an environment of very low yields. Living in a zero-interest-rate world is going to be fundamentally different from travelling towards one.
“Since the financial crisis, central banks have helped cushion investors from extreme bouts of turbulence by cutting interest rates and injecting huge amounts of liquidity into the system. This fed through into asset prices as the market hung on central banks' seemingly limitless power to 'kick the can down the road'. Judging by events in the first quarter, it now appears to be questioning whether they are running out of road.
“If, as we expect, we are entering a period where the causes of volatility are changing, investors will need to look beyond the inevitable bursts of turbulence and identify the key drivers of long-term investment returns,” Munro said.
Click through the following pages to see the seven themes Aviva Investors believes will drive financial markets over the next two to three year.