What are the three pillars that will affect your investments?

Key takeaways from the G20 forum in Turkey (Part 3 of 13)

(Continued from Part 2)

Priorities

Turkey will preside over the G20 meetings this year. Building on previous agendas and adding certain new elements, it decided to choose the following as the three pillars for 2015:

• Strengthening the Global Recovery and Lifting the Potential

• Enhancing Resilience

• Buttressing Sustainability

Strengthening the global recovery

This pillar is the one that directly affects your investment over the medium to long term. As a result, this will be at the core of our focus.

When the G20 Presidency talks about strengthening global recovery and lifting potential, it’s referring to a focused approach to monetary policy. On this front, cooperation among member nations is seen as the “greatest value-added of the Platform.”

The second important aspect of this pillar is boosting investment, especially in infrastructure, to raise the economies’ growth potential. Although the US doesn’t have wide infrastructure investment gaps like some other countries, the housing market’s recovery has been slow due to tight credit conditions.

This translates into lower-than-potential revenue for homebuilders—like PulteGroup (PHM), D.R. Horton (DHI), and Lennar Corp. (LEN). These companies form over 30% of the iShares Dow Jones US Home Construction Index Fund’s (ITB) portfolio.

An increase in general infrastructure activity, including the housing market, would also benefit the SPDR Industrial Select Sector Fund (XLI).

Enhancing resilience

This pillar focuses on providing “a healthy and stable financial system, an effective and efficient international financial architecture, a smoothly functioning and fair international tax system; and a fair and level playing field for businesses.” Although it works as means to an end, it doesn’t impact your investments directly.

Buttressing sustainability

This pillar focuses on issues of “development, energy and climate change finance.” There will be a special focus on eliminating poverty and ensuring sustainable development in low-income developing countries. Like “enhancing resilience,” this pillar also doesn’t have a direct impact on your investments.

In the next part of this series, we’ll look at the announcement that the G20 finance minister and central bankers made at the end of the meeting.

Continue to Part 4

Browse this series on Market Realist:

• Part 1 - Why is the G20 forum important for investors?

• Part 2 - Economic growth – the G20’s focus in 2015

• Part 4 - The Communiqué – analyzing the focus of the G20 meeting