Investment products such as ETFs are likely to become increasingly bespoke and complex in the coming year, according to Barclays Stockbrokers.
The firm's vice president Chris Stevenson says: "We are likely to see more ETFs tracking exotic markets, for example frontier market trackers or funds with more complicated objectives such as absolute return funds."
With the volatility of the past three years still fresh in investors' minds, Stevenson anticipates the possibility of instability becoming the market norm. In such an environment, product diversity and attention to asset allocation will be central to investment practice.
Stevenson says: "Having a more carefully constructed portfolio that can take advantage of the peaks and ride out the troughs will be crucial."
Especially, as head of product Paul Inkster points out, if eurozone concerns remain the dominant theme in 2011. As eurozone issues persist, speculation around the future prospects of the euro is liable to materialise, says Inkster.
There is good news for investors though, as Inkster anticipates retail platforms responding to demands for greater transparency in pricing and market-making as well as improving their educational efforts.
The Barclays Stockbrokers' macro outlook review also names Tesco, Tullow Oil and Vodafone as its three main stock tips for 2011. Higher growth in emerging markets is credited with the ability to drive Vodafone's expansion next year, while the launch of own-brand mortgages may drive up Tesco's share price.
Barclays says Tullow Oil should enjoy a very active drilling calendar in 2011. In addition, the firm is expected to gain from beneficial mergers and acquisitions across the sector next year.
A number of ETFs offer investors access to the oil market through near-term futures contracts. Yesterday, Global X filed for an Oil Equities ETF tracking the Solactive Global Oil Equities index.
Away from the more specialised ETF market, broad equity ETF investors received encouragement from Barclays Wealth equity strategist Henk Potts, who set the 2011 year end target for the FTSE 100 at 6100.
Potts says: "The combination of steady, modest growth, low interest rates and rising corporate profitability, should generate very respectable returns next year - especially for equities."
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