NEPC Key Market Themes represent our view of the current drivers of the global economy. The themes evolve and interact over time, influencing asset values and opportunities. A disruption of a theme likely alters market dynamics and our investment outlook.


Uneven economic progress, stagnant wage growth and growing wealth inequality are fueling discontent across developed and emerging countries, leading to populist movements with an anti-establishment political bias. The COVID-19 pandemic has further exacerbated these disparities by heavily disrupting sectors that have borne the brunt of sluggish pay.

This backlash against globalization reverses several decades of multilateral trade and relations that increased the flow of capital, goods and services and powered a burgeoning middle class across the world. This fatigue over globalization poses a risk to the established economic and geopolitical orders. It paves the way for greater volatility as voting patterns become increasingly erratic with a wider range of outcomes for tax rates and foreign and trade policies. Governments may be rendered ineffectual as a lack of political consensus incites instability and limits the passage of new reform.

At NEPC, we do not envision this movement against globalization—be it in the guise of the trade dispute between the United States and China, the exit of the United Kingdom from the European Union, or the success of unconventional candidates across the globe—resulting in a dedicated investment opportunity.

Instead, we believe this shift away from traditional political norms—for instance, a restrictive U.S. trade policy—leaves international markets prone to bouts of volatility and negative investor sentiment, likely leading to more frequent dislocations in currencies and equities. This brand of populism does not favor a specific investment action or asset class, but the heightened volatility can be a positive for equities should markets overreact.

We also believe this discontent is here to stay as we do not see the disparities in wealth and income narrowing in the near term. We continue to monitor the growth of populist movements, and the destabilization of the political order to better understand its impact on investment portfolios and capital markets.

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