Demographic trends as much as any other factor help explain the relatively modest economic growth and low interest rates that have defined the post-recession period in the United States, according to a diverse panel of experts convened by Prudential Investment Management in New York.

The firm’s annual market outlook event brings together some of the top investing minds from across the organization for a morning of networking and panel discussions. Similar to last year, the conversation was dominated by talk of interest rate trends, global demand for goods and services, and U.S. Federal Reserve policy—but more than in the past simple demographic factors were a major topic of conversation.

As explained by Ed Keon, managing director and portfolio manager for QMA, a business of Prudential Financial, the advancing age of the asset-owning and actively investing population is changing spending patterns and the demand for investment products (both stocks and fixed income) in a huge way. This is clearly true in the U.S. with the ongoing retirements of Baby Boomers, but it’s also true for developed economies globally.

“Rates are being influenced by demographics more and more,” Keon suggests. “People have been spending and investing and borrowing less. They are less interested in debt in general and therefore short and long rates are staying low for a while. A decade or longer, we believe.”

Like Keon, other Prudential Investment Management experts predicted the maximum impact of Baby Boomer retirements is still ahead. Taken together, systemic and cyclical trends indicate interest rates, inflation, and economic expansion are all likely to remain below the typical levels of the past 70 years.

NEXT: Parsing short and long term trends  

A related theme was summarized by David Hunt, CEO of Prudential Investment Management, who said the firm is operating under the assumption that global rates will remain “lower for longer,” given global growth expectations and the ongoing actions of central banks around the world—tightened Fed policy aside.

Take China, for example. Mike Lillard, managing director and chief investment officer within Prudential Fixed Income, explains the equity and bond markets in China have entered their “very challenging teenage years.” The market is transitioning to adulthood, in other words, towards a spending-based economy that will fill a wider role through a truly global, market-making currency. Growth will inevitably slide as the transition occurs, impacting global markets in a wide variety of ways. On top of this, China is also facing very challenging demographic outlook, Lillard notes.

Despite some challenges, none of the experts brought in by Prudential Investment Management sounded dire warnings about over-leveraging in markets, and all seemed reasonably sure now is still a good time to invest, so long as one is selective about risky assets. Keon explains the outlook by suggesting the “reward for risk in the markets right now is relatively modest.”

Peter Clark, managing director of Jennison Associates (part of the Prudential Financial brand), explains one response to the current environment has been to “create more concentrated diversified portfolios.” It’s a bit of an oxymoron, he admits, “but in our case this means having 40 stocks in the global equity portfolio that we’re really confident about their quality, out of a universe of more than 5,000 securities, versus a longer-term average of 50 to 55 stocks in that specific portfolio.”

Very broadly speaking, Clark says his firm is paying particular attention to the health care, consumer discretionary and information technology equity sectors. These are sectors that carry some risk and volatility but which have strong fundamentals for long term investors, from the Prudential perspective.

NEXT: Market cycles don’t die of old age

Prudential Investment Manager's experts generally sounded optimistic, and, as one pointed out, “bull market cycles don’t just die of old age.” There are many reasons for optimism when looking at global market factors, despite the challenges listed above.

With the institutional retirement planning markets in mind, panelists said the messaging of diversification and keeping a long-term outlook will best serve retirement plan investors in 2016. There will undoubtedly be bouts of market volatility, and there are some worrying signs from certain sectors, especially energy-dependent economies.

Another specific piece of advice from Lillard is to get one's ducks in a row from the liquidity standpoint, “as liquidity is clearly going to be tough given all the yield and demographic considerations we are discussing today.” At a very high level, Lillard says liquidity, especially for bonds, will remain much less predictable and dependable than it was pre-crisis.

“When it comes to building and maintaining portfolios, you just can’t rely on the assumption that the necessary liquidity will be there when you want to make your trade,” Lillard concludes. “You have to be cautious and buy things you wouldn’t mind holding for a longer term, because you may end up holding them much longer than you were anticipating. This works both ways, it’s hard to get into a trade you may want and it’s harder to get out of one you don’t want.”

Peter Hayes, head of global investment research for Prudential Real Estate Inventors, adds that more defined benefit plan sponsors can be expected to scoop up new real estate investments next year, “given the ongoing search for yield.” He advocates for a “core income play in major developed cities, especially the U.S.”