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Dynamic Markets, Agile Thinking

  

We anticipate fundamental market shifts in 2024 resulting from global dynamics and geopolitical events. Diversification† to value, quality and growth is expected to expand across asset classes while emerging regional alliances will require an active and agile asset management approach.

  

Investment ideas that could help investors fortify their portfolios

Global Opportunities Shift
Look beyond near horizons for pockets of resilience and change in a transitioning economy.

Bonds take Center Stage
Rate cuts in 2024 may be the catalyst for reducing portfolio risk by moving allocations from short- to longer-duration‡, higher-quality bonds.

Momentum for Quality Accelerates
Diversify equity holdings away from concentration risk by infusing quality across cyclicals, defensives and industries primed for the next-stage economy.

Consider Low- or Uncorrelated* Allocations
Market volatility is an expected undercurrent in 2024, suggesting that diversification to low- or uncorrelated assets may help offset the downside.

   

Dynamic Markets, Agile Thinking

Global economic uncertainty, central bank policies, and geopolitical events are leading to fundamental shifts across markets. To navigate high volatility and participate in value and growth opportunities across asset classes, investors can take an active and agile asset management approach with a focus on quality.

   Read Amundi's 2024 Mid-Year Investment Outlook 

It's all about confidence: assessing risks worth taking

  •  Inflation has been stickier than expected, but it is expected to decelerate further towards central bank targets in 2025, allowing central banks to initiate and continue the new cycle of cuts at different speeds.
  •  Equities are still attractive unless we enter a recession, which is not our base case. However, there are concerns about excessive valuations in US mega-caps. Potential opportunities abound in US quality, value and international equity. 
  •  After trading in a narrow range, fixed income yields are set for a new course, with rate cuts approaching and curves expected to structurally steepen. With yields already at historically appealing levels, a window of opportunity could be opening. 

   

 Read our 2024 Midyear Outlook 

   

Global Opportunities Shift

   

We believe the slowing of the economy, led by developed markets, will persist on a global basis while inflation will continue to ease. At the same time, tight financial conditions in many countries could impact growth. Some regions and sectors have benefited from seismic shifts over the last few years, and these changing market dynamics may offer investors differentiated sources of return. 

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Bonds Take Center Stage

With the US Federal Reserve expected to implement rate cuts in 2024, investors may have timely opportunities to shift portfolios to longer-duration positions that can help manage portfolio risk. We believe bond market sentiment will also be subject to influences such as economic and inflation forecasts, energy pricing, unexpected climate events and regional conflicts.

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Momentum for Quality Accelerates

   

We believe investors should seek to continue to add resilience to portfolios by incorporating high-quality assets that can help diversify away from the top of the market. Cyclical investments, such as utilities and telecommunications, can provide opportunities. Later in the year, consumer and financial sectors and companies that typically benefit from the energy transition, healthcare and innovations in artificial intelligence may offer attractive opportunities.

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Consider Low- or Uncorrelated Allocations

In an uncertain market environment, investors may want to recalibrate their allocations for growth while seeking to protect portfolios from downside. Beyond a traditional core portfolio, asset allocations may include low- or uncorrelated assets such as interval funds, catastrophe bonds, and other unique sources of return. A highly diversified, cross-asset strategy may provide enhanced exposure and effective risk management.

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†Diversification does not assure a profit or protect against loss. ‡Duration: A measure of the sensitivity of the price of a fixed income investment to a change in interest rates. *Correlation - The degree to which assets or asset class prices have moved in relation to one another. Correlation ranges from -1 (always moving in opposite directions) through 0 (absolutely independent) to 1 (always moving together). 

Definitions:

Cyclicals: Stocks whose performance moves in sync with trends in the economy, often because they make or sell items and services that are in demand when the economy is doing well. Defensives: Stocks that generally provides consistent dividends and stable earnings regardless of the state of the overall stock market. Duration: A measure of the sensitivity of the price of a fixed income investment to a change in interest rates. Inflation: A general increase in prices and fall in the purchasing value of money. Emerging markets: Economies of developing nations that are becoming more engaged with global markets as they grow.

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