Euro zone: The need for portfolio diversification in 2020

The expected trajectory of long-term interest rates in the euro zone points to a long period of negative returns on bond portfolio s , whereas until the summer of 2019 they had been positive. This should encourage euro-zone investors to start to diversify more in 2020 - which in reality they had not done much of until 2019 - by increasing their holdings of equities, real estate, infrastructure and private equity. Combined with continued low interest rates and abundant liquidity, these buying flows as a result of portfolio diversification will drive up the prices of all these assets in 2020 and add to the slow steepening of the yield curve, amplifying the negative returns on bond portfolios.