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RETIREMENT PLAN INVESTOR

Use your plan ID (available on your account statement) to determine which employer-sponsored retirement plan website to use:

IF YOUR PLAN ID BEGINS WITH IRK, BRK, 1 OR 2

Visit americanfunds.com/retire

IF YOUR PLAN ID BEGINS WITH 34 OR 135

Visit myretirement.americanfunds.com

2023 Investment Outlook

Our annual Outlook report offers long-term perspective on markets and economies

2023 MARKET OUTLOOK

Will the global economy tip into recession?

Most of the world’s economies are in or near recession, thanks to slowing growth, war in Ukraine, a lingering pandemic, high inflation and rising interest rates. One potential bright spot? Recessions historically haven’t lasted very long — about 10 months on average. 

An infographic illustrates the seismic shifts Capital Group investment professionals expect to define the next decade of investing: From falling rates to rising rates, from intangible products to physical assets, from global supply chains to reshoring supply chains, from narrow equity leadership to broad equity leadership.

A new reality for investors

Investors may be hoping for a return to normal after interest rates stop rising and inflation subsides. But markets are experiencing several seismic shifts that will likely define the next decade of investing. 

U.S. INVESTMENT OUTLOOK

U.S. economic outlook for 2023

Weighed down by high inflation and rising interest rates, the U.S. economy is expected to contract by 2% in 2023, says economist Jared Franz. Key for investors is that stocks have tended to rebound before the economy, with the strongest gains often immediately following a bottom.

A line graph compares the average cycle for the S&P 500 and industrial production from 1950 to 2021 indexed to 100 at each cycle peak. Industrial production measures the change in output produced by manufacturers, mines and utilities and is used here as a proxy for the economic cycle. The illustration shows that the stock market has tended to peak seven months prior to the start of a recession and recover six months before a recession ends.

Sources: Capital Group, Federal Reserve Board, Haver Analytics, National Bureau of Economic Research, Standard and Poor’s. Data reflects the average of completed cycles in the U.S. from 1950 to 2021, indexed to 100 at each cycle peak. Industrial production measures the change in output produced by manufacturers, mines and utilities and is used here as a proxy for the economic cycle. Past results are not predictive of results in future periods.

Searching for the next market leaders

New market leadership often emerges at the end of a bear market. Learn why select health care, industrial and technology companies could be well positioned.

A line graph compares the average cycle for the S&P 500 and industrial production from 1950 to 2021 indexed to 100 at each cycle peak. Industrial production measures the change in output produced by manufacturers, mines and utilities and is used here as a proxy for the economic cycle. The illustration shows that the stock market has tended to peak seven months prior to the start of a recession and recover six months before a recession ends.

Sources: Capital Group, Federal Reserve Board, Haver Analytics, National Bureau of Economic Research, Standard and Poor’s. Data reflects the average of completed cycles in the U.S. from 1950 to 2021, indexed to 100 at each cycle peak. Industrial production measures the change in output produced by manufacturers, mines and utilities and is used here as a proxy for the economic cycle. Past results are not predictive of results in future periods.

INTERNATIONAL INVESTMENT OUTLOOK

International equities outlook for 2023

Weak economies in Europe and Japan, various troubles in emerging markets and a strong U.S. dollar have clouded the forecast for international equities. But avoiding them altogether would mean ignoring some of the largest and most successful companies in the world.

The image represents a quote from Capital Group International Equity Fund (Canada) portfolio manager Gerald Du Manoir: “There are global companies generating revenue all over the world. I’m not overly concerned about where they get their mail."

It’s about companies, not economies

Even if you think economies outside the U.S. are headed for more trouble, there are important reasons to consider investing in international companies. Here are five:

FIXED INCOME INVESTMENT OUTLOOK

Bond market outlook for 2023

Interest rate turmoil hit bonds hard in 2022. But those painful losses may help set the stage for income down the road. And with the U.S. Federal Reserve signaling an end to its hiking cycle is near, bonds may once again offer some stability.

How could bonds fare as the Fed slows rate hikes?

After a tough year, bonds should once again offer diversification from equities and, therefore, a measure of protection when stock markets swing.

Get the 2023 Outlook report

Long-term perspective on markets and economies

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

Unless otherwise indicated, the investment professionals featured do not manage Capital Group's Canadian mutual funds.

References to particular companies or securities, if any, are included for informational or illustrative purposes only and should not be considered as an endorsement by Capital Group. Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any investment funds or current holdings of any investment funds. These views should not be considered as investment advice nor should they be considered a recommendation to buy or sell.

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and not be comprehensive or to provide advice. For informational purposes only; not intended to provide tax, legal or financial advice. We assume no liability for any inaccurate, delayed or incomplete information, nor for any actions taken in reliance thereon. The information contained herein has been supplied without verification by us and may be subject to change. Capital Group funds are available in Canada through registered dealers. For more information, please consult your financial and tax advisors for your individual situation.

Forward-looking statements are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied in any forward-looking statements made herein. We encourage you to consider these and other factors carefully before making any investment decisions and we urge you to avoid placing undue reliance on forward-looking statements.

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Capital Group funds are offered in Canada by Capital International Asset Management (Canada), Inc., part of Capital Group, a global investment management firm originating in Los Angeles, California in 1931. Capital Group manages equity assets through three investment groups. These groups make investment and proxy voting decisions independently. Fixed income investment professionals provide fixed income research and investment management across the Capital organization; however, for securities with equity characteristics, they act solely on behalf of one of the three equity investment groups.

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