“We are not fans of following the herd but of following the news,” say Wells Fargo Advantage Funds’ three capital markets strategists in their Outlook 2015 insight paper and video interviews available at wellsfargoadvantagefunds.com.

L to R: John Manley, chief equity strategist; Jim Kochan, chief fixed-income strategist; Brian Jacob ...

L to R: John Manley, chief equity strategist; Jim Kochan, chief fixed-income strategist; Brian Jacobsen, chief portfolio strategist, Wells Fargo Funds Management (Photo: Business Wire)

What should investors keep top-of-mind when evaluating the markets? According to Brian Jacobsen, chief portfolio strategist; Jim Kochan, chief fixed-income strategist; and John Manley, chief equity strategist, investors may want to focus on:

1. Following the flow of liquidity worldwide

  • Look for diversification from geographically dispersed investments. Foreign investments could add some growth to a portfolio.
  • Ride out market volatility. Sell-offs will likely be followed by reversals, as investors learn that the Federal Reserve is genuine in being gradual with any rate hikes.
  • Be discriminating. Not all markets are going to rise and fall together.

2. Following the shift from U.S. to foreign growth

  • Have some exposure to emerging markets. We think emerging markets have the potential to grow faster than developed markets over the next three to five years.
  • Invest in Europe. Europe’s economy has been understimulated, but that is beginning to change.
  • Look for opportunities in financials, energy, industrials, and technology.

3. Following the Fed and the global hunt for yield

  • Focus on compounding interest income rather than holding low or no-yield investments such as cash equivalents.
  • Wait for higher yields and wider spreads in the international, municipal, and investment-grade markets before allocating more to those areas.
  • Diversify your fixed-income holdings in both developed and emerging markets to help manage unknown risks, but be extra careful within the energy-focused emerging markets.

To access additional Wells Fargo market insight, please visit wellsfargoadvantagefunds.com or call 1-800-368-7560.

About Wells Fargo Funds Management

Wells Fargo Funds Management, LLC, a wholly owned subsidiary of Wells Fargo & Company, provides investment advisory and administrative services for Wells Fargo Advantage Funds. Other affiliates of Wells Fargo & Company provide subadvisory and other services for the funds. The funds are distributed by Wells Fargo Funds Distributor, LLC, Member FINRA/SIPC, an affiliate of Wells Fargo & Company.

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