The current investing environment is setting the stage for greater volatility and also creating opportunities for investors to perform well throughout 2024.
Higher interest rates and greater volatility define the new investing regime we’re in. In turn, that’s creating greater dispersion of returns among different investments. We think investors will benefit from taking a more active approach to portfolios as we head into next year.
Here’s our three investment themes for 2024:
1. Managing macro risk
2. Steering portfolio outcomes
3. Harnessing mega forces
Managing macro risk:
Production constraints mean central banks face tougher trade-offs between inflation and growth. They can’t respond to faltering growth by lowering interest rates as they have done in previous periods without risking higher inflation. This leads to a wider set of potential market outcomes and a more uncertain macro outlook.
Steering portfolio outcomes:
Greater volatility and dispersion of returns create space for investment expertise to shine – that involves being more dynamic with indexing and alpha-seeking strategies, while staying selective.
Harnessing mega forces:
We see five structural shifts reshaping markets and driving returns now and in the future. We think they have become important portfolio building blocks on their own.