Macro views

2023 outlook: Silver linings

December 15, 2022

Seema Shah

Chief Global Strategist

Han Peng, CFA

Quantitative Strategist

Garrett Roche, CFA, FRM

Global Market Strategist

In last year’s Global Insights 2022 outlook, Past the peak, we highlighted how with equity valuations at or near all-time highs, rates near all-time lows, and central banks gearing up to end easy monetary policy, 2022 would present a more challenging and volatile investment environment. Frustratingly for investors, that call was dead on, with both U.S. equities and bonds, for the first time since the 19th century, recording double-digit yearly declines!

2023, however, is sizing up to be a better year for some segments of the market. Inflation and central bank policy will likely continue being key focus points for investors. Yet, while persistently restrictive monetary policy and the likely resulting U.S. recession will weigh on the broad equity market outlook, it implies opportunities for both core fixed income and real assets.

China’s potential reopening will be another key theme to watch in 2023. The path to loosening COVID- 19 restrictions may bring chaos locally, but a targeted combination of COVID-19 reopening and stimulus tailwinds could be very positive for China and the global economy. What’s more, it should contribute to the ending of the U.S. dollar bull run in what could be a pivotal shift for emerging market economies.

As ever, the path forward is rarely straight and is never simple. In a world with still so much uncertainty and volatility, our 2023 outlook, Silver linings, is designed to help investors navigate the key themes that we think will drive financial markets next year: Federal Reserve policy, China reopening, and U.S. dollar strength.

We wish you a happy and successful 2023.

Seema Shah, Chief Global Strategist

Federal Reserve policy: Restrictive, but no regrets

2023 may not see a repeat of the frantic Federal Reserve (Fed) activity that characterized 2022, but policy rates almost certainly still have further to rise. And while it may not be evident yet, the most aggressive monetary tightening cycle since the 1980s will leave a visible imprint on the economy in 2023. Unfortunately, relief from the Fed will not be forthcoming, even as a probable recession takes shape.

After four consecutive 75 basis point (bps) Fed hikes and a post-pandemic resolution of supply chain bottlenecks, U.S. inflation is finally on a decelerating path. However, history suggests that inflation will continue to trigger angst and anxiety in policymakers through 2023. Since the 1980s, once inflation in developed economies has risen to 5%, it has taken an average of 10 years to return to 2%! Of course, central banks today have a broader toolkit and greater credibility, so it shouldn’t take a decade to return to target. But, progress will be frustratingly slow, requiring deliberate Fed attention to get inflation close to 2% within even the next 24 months, let alone the next 12.

Once inflation in developed economies hit 5%, it took multiple years to fall to 2%
Years taken to tame inflation
Developed economies and year in which inflation first hit 5%, 1980–2021

Bar graph of developed economies and year in which inflation first hit 5%, 1980–2021

IMF World Economic Outlook Database, Principal Asset Management. Data As of December 15, 2022.

Disinflation needs some help

There are segments of the inflation basket that will soften rapidly. Food and energy prices, for example, have fallen sharply, while the supply chain recovery is finally yielding relief for goods price inflation. For services, however, disinflation will be a slow process, requiring below-potential economic growth and a continued loosening in the labor market.

So far, the U.S. economy and labor market are slowing, just not fast enough. The Atlanta Fed’s GDPNow tracker estimates that U.S. real GDP growth in Q4 is still running at an above-trend 4%. In the labor market, there are 4.6 million more job openings than there are unemployed workers—almost the widest gap in at least 20 years—while monthly payrolls have been hovering around 175,000, a level historically consistent with strong economic growth.

The U.S. labor market is showing little sign of loosening
Job openings minus unemployed workers
Thousands, January 2000–November 2022

Line graph showing job openings minus unemployed workers, in thousands, from 2000-2022

Bureau of Labor Statistics, Principal Asset Management. Data as of December 15, 2022.

So, while the Fed is stepping down the pace of rate increases, the pervasive nature of the inflation problem requires the Fed to hike rates further—and stomach considerable further economic weakness—ultimately engineering a likely hard landing for the U.S. economy.

A pause is not a pivot

In recent months, talk of a “Fed pivot”—a lifeline offered by the central bank as economic pressures become too intense—has become rampant. The rationale for pivot expectations is clear: Historically, once Fed rates peak, rate cuts follow within just six months.

However, Fed resistance to policy rate cuts in 2023 will likely be very high. Not only is recession a necessary step in the path towards price stability, but the Fed has also been burned by regret from their previous inflation mistakes. In the early 1980s, they cut rates too soon, inviting a resurgence in inflationary pressures which ultimately required even more aggressive monetary tightening. Their miscalculated decision to keep rates at zero last year, even as inflation surged, will inevitably be in their mind too.

The consequence will most likely be that, after reaching a peak rate of 5.25-5.5% in the first half of the year, Fed policy will have to remain restrictive throughout 2023—even as the U.S. economy falls into recession.

China: How to steer a stranded ship?

China’s equity market underperformance has lasted almost two years, but a lifting of COVID-19 restrictions in 2023 could finally offer some respite if the government combines reopening with policy stimulus.

The past two years have been a tough slog for China investors. In 2021, despite a modest economic recovery, intensified regulations and anti-monopoly measures led to a steep valuation contraction in Chinese assets. In 2022, although the regulatory environment had marginally improved, the government’s restrictive COVID-19 policy and a deep property market downturn ensured a continuation of the weak economic and market backdrop.

Early in the global pandemic, China’s “zero-COVID” policy had been viewed as a success. After nearly eradicating all local infections, China became the first country to “recover” from the pandemic. Recently, however, highly infectious new strains have rendered China’s once effective policy extremely costly to maintain, with repeated lockdowns and extended quarantine periods resulting in a severe economic slowdown. Policymakers have tried to alleviate the struggles by keeping both fiscal and monetary policies reasonably accommodative even while the rest of the global economy has tightened financial conditions. Yet, this has only dulled the pain, with the frequent COVID-19 lockdowns weighing on confidence and deterring consumption activity, ultimately restricting the impact of policy stimulus.

China COVID-19 cases mounted even as government policy remained relatively restrictive
China COVID-19 case counts and policy restrictiveness
Month-over-month change in reported cases, Stringency Index level, February 2020–November 2022

Line graph showing month-over-month change in reported COVID-19 cases in China and the Stringency Index Level, from February 2020–November 2022

Bloomberg, Principal Asset Management. Data as of December 15, 2022. Note: The Stringency Index was generated by Oxford to measure government response on COVID-19. A higher number indicates more restrictive policies.

A change of course in COVID-19 policy

It has become increasingly evident to the government that the one policy lever that holds the key to unlocking a Chinese recovery is an unwinding of the “zero-COVID” policy. Recent steps to lift COVID- related restrictions should unleash the pent-up demand from consumers and improve employment, as well as remove the impediments to other stimulative measures:

Housing: The property market was another culprit behind China’s recent economic downturn. While there is already a tentative policy shift in favor of this sector, tepid confidence is preventing policy from having its desired impact. A “COVID reopening” will support housing demand, enabling policy to jump start a property market recovery.
Fiscal stimulus: A COVID-19 reopening should mean that the government can eventually save fiscal powder from costly PCR tests and collective quarantine facilities, using those funds for more productive spending instead. In addition, the removal of restrictions will likely help lift the impact of fiscal stimulus on infrastructure investment.
Monetary stimulus: With the true pain residing in the lack of demand, households and companies have not taken advantage of rate cuts or targeted relending. A reopening will likely lead to confidence restoration among households and businesses, kick-start demand and enable monetary stimulus to be more effective in driving growth.

Weak loan demand in China despite historically low interest rates
China loan demand and interest rates
Quarterly, January 2009–September 2022

Line graph of China loan demand and interest rates, quarterly, from January 2009-September 2022

Bloomberg, People’s Bank of China, Principal Asset Management. Data as of December 15, 2022.

Costly, but necessary change

As experienced by other countries, a rapid surge in COVID-19 cases following reopening can bring chaos and setbacks. Yet, after the economic struggles of the past two years, China’s government is increasingly focusing on long-term economic benefits. A targeted combination of COVID-19 reopening and stimulus tailwinds could set China on a strong rebound path in 2023. By contrast, without easing COVID-19 policy, and despite any further fiscal stimulus, monetary easing, or accommodative housing policy, could lead to another year of muddling through, increasing the risks of short-term pain turning into chronic economic lethargy.

U.S. dollar: Developments can drive global opportunities

In a year where both traditional equity and fixed income assets have performed very poorly, the U.S. dollar has been one of the stand-out performers. Unfortunately, the U.S. dollar’s strength has intensified and deepened economic challenges around the world, lessening the attractiveness of global risk assets.

Dollar outlook

As a strong U.S. dollar became an increasingly consensus view in 2022, investor positioning became exceedingly one-sided, resulting in valuation extremes. Once softer U.S. inflation data finally appeared in mid-2022, expectations of continued Fed rate hikes were quickly revised lower, in turn driving a sharp U.S. dollar correction. Now, investors are reassessing the outlook for the greenback, and possible implications for global risk assets into 2023.

Despite its recent sharp pullback, U.S. dollar fundamentals remain supportive near-term. For now, U.S. economic strength dictates that the Fed will hike rates further and remain the most hawkish of all major central banks—likely allowing the U.S. dollar to enjoy near-term strength. However, after a few more rate increases, a Fed pause in the first six-months of 2023 is increasingly likely, and should lead to a sustainably weaker U.S. dollar. This dollar-negative development should be supplemented by China ending its zero-COVID policy and re-opening its economy.

Global opportunities

A weaker U.S. dollar would help loosen global financial conditions, ultimately relieving inflationary pressures in Europe’s economy, and devaluing EM debt in local terms. With such relief, non-U.S. central banks (in both developed and emerging markets) should be able to recalibrate from currency defense and fighting inflation via demand destruction, to more growth-supportive policies. Not only would this be incrementally positive for global growth, but it should also brighten the relative outlook for both EM and European global risk assets.

Further U.S. dollar weakness suggests EM could outperform U.S. stocks
U.S. dollar index and U.S. versus EM performance
2020-present

Line graph showing U.S. dollar index and U.S. versus EM performance, from 2000-2022

S&P Dow Jones Global Indices, MSCI, CME, Bloomberg, Principal Asset Management. Data as of December 1, 2022.

Current valuation premiums attached to U.S. assets present deep valuation discounts overseas. Once the U.S. dollar hits a sustainably weaker trend, global long-term investors may be able to capture increasingly attractive opportunities outside of the U.S., despite lingering global growth concerns and geopolitical wildcards.

Only commodities have outperformed the U.S. dollar in 2022
U.S. dollar and asset class performance year-to-date
Total returns

Bar graph of U.S. dollar and asset class performance year-to-date

Source: Clearnomics, Refinitive, Bloomberg, Principal Asset Management. Data as of December 7, 2022. Commodities = Bloomberg Commodity Index, U.S. dollar = U.S. Dollar Index, Fixed Income = iShares Core U.S. Bond Aggregate Index, Balanced = Hypothetical 60/40 portfolio consisting of 40% U.S. Large-Cap, 5% Small-Cap, 10% International Developed Equities, 5% Emerging Market Equities, 35% U.S. Bonds, and 5% Commodities, EAFE = MSCI EAFE Index, Small Cap = Russell 2000 Index, EM = MSCI EM Index. For illustrative purposes only. Indices are unmanaged and do not take into account fees, expenses, and transaction costs and it is not possible to invest in an index.

Global risk assets typically suffer under dollar strength, and 2022 was no different. However, such a precipitous ascent in the dollar often results in a crisis type scenario, which ultimately did not arise. Many emerging market assets have fared relatively well compared to history, helped by fiscal discipline and precautionary monetary policy and, therefore, once conditions improve, their recoveries could be fairly swift. As such, while dollar strength should be expected as the Fed continues to hike policy rates, a Fed pause could set the stage for a meaningful rally in global risk assets and the emergence of a more sustainable downward trend for the dollar in 2023.

Summary

Our three leading themes inform the broad investment landscape for 2023 and suggest that, unlike 2022, where stocks and bonds fell together, opportunities will likely be more forthcoming.

Broad equities will likely remain challenged as U.S. recession weighs on earnings growth, yet those same factors should benefit the high-quality segments of core fixed income. While we expect the Federal Reserve will hike rates a few more times in 2023, it is likely nearing the completion of its tightening cycle. This implies that bonds will be able to support portfolios as recession approaches, with government bond yields under downward pressure and securitized debt typically providing mitigation during periods of volatility and risk. Within credit markets, the longer duration, high-quality profile of investment grade should be capitalized. Importantly, credit now offers more attractive yields than in recent years, finally meriting portfolio allocation.

A full China reopening will not happen overnight. Yet a roadmap for an end to China’s stringent COVID- 19 measures, coupled with additional stimulus policies, should provide the catalyst for a significant rebound in Chinese economic activity and risk assets in 2023. The positive impact should extend far, providing a boost to its major trading partners across Europe and particularly Asia. Global commodity prices also stand to benefit.

The U.S. dollar’s bull run has likely been exhausted and, once it has convincingly changed direction, should brighten the relative outlook for both emerging markets and European global risk assets. The relatively attractive valuations outside the U.S. suggest investors stand to gain through global diversification.

While 2023, with its challenges and risks, certainly looks daunting, a clear playbook is beginning to emerge. Diversification across asset classes is both recommended and appealing; inflation mitigation continues to be necessary; and taking advantage of attractively valued global opportunities will likely be rewarded.

Disclosure

Risk considerations
Investing involves risk, including possible loss of principal. Past performance is no guarantee of future results. Asset allocation and diversification do not ensure a profit or protect against a loss. Equity investments involve greater risk, including higher volatility, than fixed-income investments. Fixed-income investments are subject to interest rate risk; as interest rates rise their value will decline. International and global investing involves greater risks such as currency fluctuations, political/social instability and differing accounting standards. Non-investment grade securities offer a potentially higher yield but carry a greater degree of risk. Emerging market debt may be subject to heightened default and liquidity risk. Risk is magnified in emerging markets, which may lack established legal, political, business, or social structures to support securities markets. Inflation and other economic cycles and conditions are difficult to predict and there Is no guarantee that any inflation mitigation/protection strategy will be successful. Commodity futures contracts generally are volatile and not appropriate for all investors.

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Use of cookies on this site is outlined in the Principal Online Privacy Policies, Information Collected by Use of Cookies and Spotlight Tags. In accepting these terms and conditions, you accept the terms of the use of cookies from this site. You can configure your browser to accept all cookies, reject all cookies, or notify you when a cookie is sent. Refer to your browser instructions or help screens to learn about these functions. If you reject all cookies, you may not be able to use our web sites.

We may collect, hold and use personal information in order to process applications, administer the investments and provide related services. If you do not provide your personal information to us, we may not be able to process and administer your investment. We may also use your personal information to tell you about other products and services offered by us or other members of the Principal Financial Group. Please contact us if you do not wish to receive this ongoing information.

We may disclose your personal information to other related companies within the Principal Financial Group®, agents and other external service providers (who supply administrative, financial or other services), some of which are located overseas. Where this occurs, we take steps to protect personal information against misuse or loss however you should be aware that in the event the overseas recipient fails to handle the personal information consistently with the Australian Privacy Principles, we will not be accountable under the Privacy Act and you will not be able to seek redress under the Act. The countries this information may be disclosed to will vary from time to time, but may include Brazil, Chile, China, Hong Kong, India, Japan, Malaysia, Singapore, the United Kingdom and the United States and other countries where the Principal Financial Group® has a presence. A list of locations in which the Principal Financial Group® operates can be found at https://www.principal.com/about-us/our-company/company-overview/worldwide-locations. Our Privacy Policy contains information about how you can gain access to the personal information that we hold about you and seek correction of that information, subject to certain exemptions under law. Our Privacy Policy also contains information about how you may raise concerns regarding privacy with us and how we will deal with your concerns.

You can obtain a copy of our Privacy Policy by clicking on the link below:

Privacy at Principal Global Investors (Australia) Limited

By clicking "Accept", you consent to us dealing with your personal information in the manner set out in our Privacy Policy. You also acknowledge and understand that by providing such consent that we will not be required to take such steps as are reasonable in the circumstances to ensure overseas recipients of your personal information comply with the Australian Privacy Principles.

"Principal Financial Group is a global organization that operates in many different jurisdictions worldwide. Principal Financial Group’s diversified group of companies and affiliates provide comprehensive asset management solutions for institutional investors, investment funds and individuals in key markets around the world. Principal Financial Group has investment offices in the United States, [Mexico, South America, Europe, the Middle East, and throughout Asia]. Where appropriate, Principal Financial Group entities are registered with appropriate regulatory authorities in the jurisdictions in which they are required to be registered to carry on their respective business activities.

All products or services provided to you by any Principal Financial Group company shall only be available in the jurisdiction(s) within which the company providing the product or service is authorized to operate. The relevant Principal Financial Group company reserves the right to make the final determination on whether or not you are eligible for any particular product or service. If you choose to enter a website outside your country of residence, you are advised that it may not be legal in that jurisdiction for you to access or use the facilities available on that Site and the legal requirements of that jurisdiction may prohibit you from dealing or otherwise transacting in that jurisdiction.

Principal Financial Group makes no representation that the content of the site is appropriate for use in all locations, or that the transactions, securities, products, instruments or services discussed at this site are available or appropriate for sale or use in all jurisdictions or countries, or by all persons and entities. Nothing on this website shall be considered a solicitation for the offering of any investment product or service to any person in any jurisdiction where such solicitation or offering may not lawfully be made.

You may view, download for caching purposes only, and print content from the website for your own personal use, subject to the restrictions set out below and elsewhere in these Terms of Use.

No Guarantee of Timeliness
This website may contain videos where the comments were valid on the date the video was recorded. Markets move continuously and you should only rely on current information for any investment decisions. The information and materials contained on this website, and the terms, conditions, and descriptions that appear, are subject to change. All content on this website is presented only as of the date published or indicated, and may be superseded by subsequent market events or for other reasons. In addition, you are responsible for setting the cache settings on your browser to ensure you are receiving the most recent data.

No Warranties
The information on this website has been developed internally and/or obtained from sources believed to be reliable; however Principal Global Investors and its affiliates do not independently verify or guarantee its accuracy or validity. The information and services provided on this website are provided ""AS IS"" and without warranties of any kind, either expressed or implied. To the fullest extent permissible pursuant to applicable law, Principal Global Investors disclaims all warranties, including, but not limited to, any warranty of non-infringement of third-party rights and any implied warranties of merchantability and fitness for a particular purpose. Principal Global Investors does not warrant, either expressly or impliedly, the accuracy or completeness of the information, text, graphics, links or other items contained on this website and does not warrant that the functions contained in this website will be uninterrupted or error-free, that defects will be corrected, or that the website will be free of viruses or other harmful components. Principal Global Investors expressly disclaims all liability for errors and omissions in the materials on this website and for the use or interpretation by others of information contained on the website. Subject to any contrary provisions of applicable law, no company in the Principal Financial Group nor any of their employees or directors gives any warranty of reliability or accuracy nor accepts any responsibility arising in any other way (including by reason of negligence) for errors or omissions on this website.

If you have questions, please email us.

Click ""Accept"" to indicate your acknowledgement and acceptance of Principal Global Investors Terms of Use and to continue."

"These Terms & Conditions explain certain legal and regulatory conditions and restrictions in relation to the Principal Global Investors (Europe) Limited website, and in relation to the Principal Global Investors Funds (‘the Funds’). This information may be changed by Principal Global Investors at any time without notice.

In these terms and conditions, references to 'Principal Global Investors' means Principal Global Investors (Europe) Limited or any affiliate of the Principal Financial Group, Inc. or Principal Global Investors, LLC.

Before you proceed, you must acknowledge that you have read, and agree to, our terms and conditions.

Information in relation to the Principal Global Investors Funds is available through this web site to institutional investors resident in the following countries of: Belgium, France, Finland, Germany, Guernsey, Ireland, Italy, Jersey, Netherlands, Spain, Sweden, Switzerland and the United Kingdom. By proceeding this far you are representing and warranting that you are an institutional investor resident in one of these countries. Not all of the Funds are available in all these jurisdictions, and investors are directed to the Country Registration document for detailed information . What follows is not an offer or invitation to acquire an investment to, and should therefore not be relied upon by, any person anywhere other than the countries noted. Persons in respect of whom such prohibitions apply must not access this web site. This web site is reserved exclusively for non-U.S. persons and should not be accessed by any person in the United States.

Yes, I certify to be an institutional investor and resident of a country listed above.

Cookies
Use of cookies on this site is outlined in the Privacy and Security Policy. In accepting these terms and conditions, you accept the terms of the Cookie Policy and the use of cookies from this site.

Legal Entity Disclosure and Regulation
In Europe by Principal Global Investors (EU) Limited, Sobo Works, Windmill Lane, Dublin D02 K156, Ireland. Principal Global Investors (EU) Limited is regulated by the Central Bank of Ireland.

In the United Kingdom by Principal Global Investors (Europe) Limited, Level 1, 1 Wood Street, London, EC2V 7 JB, registered in England, No. 03819986, which is authorised and regulated by the Financial Conduct Authority (“FCA”).

In Switzerland by Principal Global Investors (Switzerland) GmbH. This website is considered as advertising and information contained herewith be treated as such. Investors can obtain free of charge the prospectus, trust deed, the prospectus, the key investor information document (KIID), and the annual and semi-annual reports from the representative in Switzerland.

In Europe and United Kingdom, this website is directed exclusively at Professional Clients and Eligible Counterparties and should not be relied upon by Retail Clients (all as defined by the MiFID and FCA respectively). If you are viewing the material as a retail investor, you should seek independent investment advice before deciding whether the products and services in question are suitable to meet your investment needs and objectives, as the language has not been complied to a retail client standard.

Principal Global Investors Funds
Principal Global Investors (Ireland) Limited is the issuer of the Funds. Investments may only be made on an application form attached to a current prospectus and following receipt by the investor of the KIID in respect of the Fund in which they intend to invest. The latest version of the prospectus of the Funds is dated 14 December 2012.

For Real estate investors in the European Economic Area (“EEA”), this website and the information on it is only directed at persons who are professional investors for the purposes of the Alternative Investment Fund Managers Directive (2011/61/EU) (“AIFMD”), professional clients or eligible counterparties for the purposes of the Markets in Financial Instruments Directive (Directive 2014/65/EU) (“MiFID II”) or as otherwise defined under applicable local law and regulation and at whom this website and the information on it may lawfully be directed in any relevant jurisdiction (“Eligible Persons”). In relation to each member state of the EEA (“Member State”) which has implemented AIFMD (and for which transitional arrangements are not/ no longer available), this website may only be accessed and interests in Funds may only be offered or placed in a Member State to the extent that: (i) the relevant Fund is permitted to be marketed to professional investors in the relevant Member State in accordance with AIFMD (as implemented into the local law/regulation of the relevant Member State); or (ii) this website and its information may otherwise be lawfully distributed and the interests in Funds may otherwise be lawfully offered or placed in that Member State (including at the initiative of the investor). In relation to each Member State of the EEA which, at the date of accessing this website, has not implemented AIFMD, this information may only be distributed and interests in Funds may only be offered or placed to the extent that this information may be lawfully distributed and the interests in Funds may lawfully be offered or placed in that Member State (including at the initiative of the investor).

Persons who are not Eligible Persons, including but not limited to those individuals or other persons who fall within the FCA’s definition of ‘retail clients’, should not use or rely upon this website or the information contained therein and may not engage the services of Principal Real Estate or any of its affiliates, or invest in any Fund. Potential investors are advised that all or most of the protections provided by the UK regulatory system will not apply and that the UK Financial Services Compensation Scheme may not be available in relation to an investment in a Fund or separate account.

The contents of this website have not been verified or approved by any competent regulatory or supervisory authority. No liability, whether in negligence or otherwise, arising directly or indirectly from the use of the information or any part of it on this website is accepted and no representation, warranty or undertaking, whether express or implied, is or will be made at any time by Principal Real Estate or its affiliates or any of their respective advisers, directors, officers, employees, representatives or other agents (“Principal Agents”) for any information or any of the opinions contained herein or for any errors, omissions or misstatements.

None of Principal Real Estate or its affiliates or any Principal Agents makes or has been authorised to make any representation or warranties, whether express or implied, in relation to Principal Real Estate or regarding the truth, accuracy or completeness of any of the information contained on this website at any time. No representation or warranty is given by Principal Real Estate, its affiliates or the Principal Agents as to the achievement or reasonableness of, and no reliance should be placed on any projections, targets, estimates or forecasts contained in the information on this website. Furthermore, nothing contained on this website is or should be relied on as a promise or representation as to the future. No reliance may be placed by any person for any purpose whatsoever on the information or opinions contained on this website or on its completeness, accuracy or fairness at any time.

Principal Global Investors (Europe) Limited is not authorised by the FCA to directly deal with retail investors; any distribution of the Fund to retail investors in Europe is facilitated by fund distributors with which Principal Global Investors (Europe) Limited has entered distribution arrangements, pursuant to advice provided to investors by those distributors, based on the documents Principal Global Investors (Europe) Limited provides. Retail investors should not be provided with access to this website.

The name of the Swiss representative is ACOLIN Fund Services AG, Stadelhoferstrasse 18, CH-8001 Zürich. The name of the Swiss paying agent is Banque Cantonale de Genève, 17, quai de l’Ile, 1204 Geneva. Investors can obtain the prospectus, trust deed, the simplified prospectuses and the annual and semi-annual reports free of charge from the representative in Switzerland.
The value of units and the income from them may fall as well as rise.

Investments in the Funds are neither insured nor guaranteed by the US Government or the Federal Deposit Insurance Corporation and are not deposits or obligations of, or guaranteed by, Principal Global Investors.

No Solicitation
Nothing contained in this website shall constitute an offer or solicitation, in relation to units in the Funds or generally, in any jurisdiction or in any circumstances in which such offer or solicitation is unlawful or not authorised.

In particular, shares issued by the Company, and units in the Funds, have not been and will not be registered under the United States Securities Act of 1933 as amended or the securities laws of any state or political subdivision of the United States and may not, except in a transaction which does not violate US securities laws, be directly offered or sold in the United States or to any US Person. The Company will not be registered under the United States Investment Company Act of 1940 as amended.

This website is reserved exclusively for non-US persons and should not be accessed by any person in the United States.

No Investment Advice
The information in this website contains general information only on investment matters and should not be considered as a comprehensive statement on any matter and should not be relied upon as such nor should it be construed as specific investment advice, an opinion or recommendation. The general information it contains does not take account of any investor’s investment objectives, particular needs or financial situation, nor should it be relied upon in any way as a forecast or guarantee of future events regarding a particular investment or the markets in general. Past performance is not a reliable indicator of future performance and should not be relied upon as a significant basis for an investment decision.

You should also inform yourself as to (a) the possible tax consequences, (b) the legal requirements and (c) any foreign exchange restrictions or exchange control requirements which you might encounter under the laws of the countries of your citizenship, residence or domicile and which might be relevant to any investment, including the subscription, holding, transfer or disposal of units in the Funds

Delegation of Investment Management to Affiliates

Products upon which composite results contained in this material, if any, are based may not themselves be available in the United Kingdom and certain other jurisdictions; however, the underlying investment management capability can be made available to institutional investors subject to all applicable local regulations and restrictions. In connection with its management of client portfolios, PGIE may delegate management authority to affiliates that are not authorised and regulated by the Financial Conduct Authority. In any such case, the client may not benefit from all protections afforded by rules and regulations enacted under the Financial Services and Markets Act 2000.

Disclaimer
The information on this website is given by Principal Global Investors in good faith and has been derived from sources believed to be reliable and accurate as at their date. However, Principal Global Investors makes no representation or warranty of any kind for the accuracy or completeness of the information and it is under no obligation to update or correct any errors in the information after the date of publication. This website also contains videos where the comments were valid on the date the video was recorded. Markets move continuously and you should only rely on current information for any investment decisions.

Subject to applicable law, Principal Global Investors and its affiliates and their respective directors, employees and associates do not accept any responsibility arising in any way (including by reason of negligence) for errors in, or omissions from, the information and do not accept any liability for any loss or damage, however caused, as a result of any person relying on any information on the website or being unable to access the website.

The Internet is not a totally reliable and secure medium of communication. Principal Global Investors accepts no liability for the security or confidentiality of information transmitted in this way and any such transmission of information shall be at your own risk.

The entire content of this website is subject to copyright with all rights reserved. You may not copy, reproduce, distribute or modify the content of this website without the prior written permission of Principal Global Investors.

No instructions for investment purposes will be accepted directly from this website or by e-mail.

If you accept these terms and conditions, click ""Accept."""

You are about to leave PrincipalAM.com and be directed to our Japanese site, PrincipalGlobal.jp. If you wish to proceed, please click "Accept." If you would like to stay on PrincipalAM.com, please click "I do not accept."

You may view, download for caching purposes only, and print content from the website for your own personal use, subject to the restrictions set out below and elsewhere in these Terms of Use.

No Guarantee of Timeliness
This website may contain videos where the comments were valid on the date the video was recorded. Markets move continuously and you should only rely on current information for any investment decisions. The information and materials contained on this website, and the terms, conditions, and descriptions that appear, are subject to change. All content on this website is presented only as of the date published or indicated, and may be superseded by subsequent market events or for other reasons. In addition, you are responsible for setting the cache settings on your browser to ensure you are receiving the most recent data.

No Warranties
The information on this website has been developed internally and/or obtained from sources believed to be reliable; however Principal Global Investors and its affiliates do not independently verify or guarantee its accuracy or validity. The information and services provided on this website are provided ""AS IS"" and without warranties of any kind, either expressed or implied. To the fullest extent permissible pursuant to applicable law, Principal Global Investors disclaims all warranties, including, but not limited to, any warranty of non-infringement of third-party rights and any implied warranties of merchantability and fitness for a particular purpose. Principal Global Investors does not warrant, either expressly or impliedly, the accuracy or completeness of the information, text, graphics, links or other items contained on this website and does not warrant that the functions contained in this website will be uninterrupted or error-free, that defects will be corrected, or that the website will be free of viruses or other harmful components. Principal Global Investors expressly disclaims all liability for errors and omissions in the materials on this website and for the use or interpretation by others of information contained on the website. Subject to any contrary provisions of applicable law, no company in the Principal Financial Group nor any of their employees or directors gives any warranty of reliability or accuracy nor accepts any responsibility arising in any other way (including by reason of negligence) for errors or omissions on this website.

If you have questions, please email us.

Click ""Accept"" to indicate your acknowledgement and acceptance of Principal Global Investors Terms of Use and to continue."

"Principal Global Investors, LLC, the issuer of this website, is a branch registered in the Dubai International Financial Centre and is authorized by the Dubai Financial Services Authority as a representative office.

This website contains general information only on investment matters and nothing in this website is intended to constitute or form part of any offer or inducement to issue or sell, or any solicitation of any offer to subscribe for or purchase, any securities or investment products in the UAE (including the Dubai International Financial Centre) and accordingly should not be construed as such. Information in this website is not directed at you if we are prohibited by any law of any jurisdiction from making the information on this site available to you and is not intended for any use that would be contrary to local law or regulation. Products or services mentioned on this site are subject to legal and regulatory requirements in applicable jurisdictions and may not be available in all jurisdictions. Accordingly persons are required to inform themselves of and observe any such restrictions.

The information in this website is being made available on the basis that the recipient acknowledges and understands that the entities and securities to which it may relate have not been approved, licensed by or registered with the UAE Central Bank, the Dubai Financial Services Authority or any other relevant licensing authority or governmental agency in the UAE or elsewhere in the Middle East.

The information in the following website should not be construed as investment advice or a recommendation for the purchase or sale of any security. The value of investments and the income from them may fall as well as rise. Principal Global Investors, LLC and the other member firms of Principal Global Investors (collectively, the ""Firms"")* do not guarantee any investment results and there can be no assurance that the strategies employed will improve investment performance, and make no guarantee that a client's investment objectives will be achieved and no warranties or representations, expressed or implied, are made by the Firms concerning the benefits of these strategies discussed herein. The information in this website has been developed internally and/or obtained from sources that the Firms believe to be reliable; however, the Firms do not guarantee the accuracy, adequacy or completeness of such information and are not responsible for any errors or omissions. This website also contains videos where the comments were valid on the date the video was recorded. Markets move continuously and you should only rely on current information for any investment decisions.

This website contains general information only on investment matters and should not be considered as a comprehensive statement on any matter and should not be relied upon as such. The information it contains does not take account of any investor's investment objectives, particular needs or financial situation. Past performance is not a reliable indicator of future performance and should not be relied upon as a significant basis for an investment decision. You should consider whether an investment fits your investment objectives, particular needs and financial situation before making any investment decision.

Nothing in this website should be construed as investment, tax, legal or other advice.

The content of this website has not been approved by or filed with the UAE Central Bank or Dubai Financial Services Authority.

Access to this website is only permitted for ""sophisticated institutional investors/professional clients"". If you are not a ""sophisticated institutional investor/professional client"", you may not access this website and you should select the ""Decline"" link below.

By selecting the ""Accept"" button below, and entering this website, you agree to these terms and confirm and represent that you are a "" sophisticated institutional investor/professional client""."