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12 investing outlooks for 2024 — from Apollo to Vanguard, from public to private equities

Research on investing outlooks helps you understand the issues -- the concerns, the opportunities.

Equities editorial director

Investment analysts at large banks and asset managers typically employ staffs that dwarf their specialized rivals. Yet their predictions for the new calendar year tend to migrate around average annual historical gains, especially for the benchmark S&P 500 Index. And those investing outlooks tend to be wrong because markets rarely post average gains in a single year.

Still, the most valuable output in those thousands of pages of research is to understand the issues — the concerns, the opportunities — that change from year to year, helping you to position your portfolio for the best chance of success.

With that said, Equities has posted reports from 12 banks and investment houses, below, that reveal a mix of views on the economy, the Federal Reserve and asset classes — stocks, bonds and private markets.

Apollo: “We believe private credit offers an attractive opportunity today given higher yields in general and on senior secured debt in particular—allowing investors to boost income generation in their portfolios with downside protection. … Opportunities in private equity are likely to continue to emerge among potential distressed companies that come along with the combination of slowing growth and high rates. Moreover, we see opportunities in assets that can offer some level of inflation protection, such as infrastructure.”

BlackRock: “Our bottom line for 2024: Investors need to take a more active approach to their portfolios. This is not a time to switch on the investing auto pilot; it’s a time to take the controls. It’s important to be deliberate in taking portfolio risk, in our view, and we expect to deploy more risk over the next year.”

Fidelity: “The world is always uncertain. But this is one of those periods when it is not an exaggeration to use the phrase ‘regime change.’ Investors will need to stay nimble in 2024, ready to navigate each twist and turn as the real scenario plays out.” The four views: Scenario 1: Cyclical recession — our base case; scenario 2: Soft landing; scenario 3: Balance sheet recession; scenario 4: No landing.

Franklin Templeton: The investment manager highlights six trends. “Growth is stabilizing: Recession risks are moderating for some developed economies, and the outlook is stabilizing.” “Inflation risks are now more balanced: Inflation is still well above target levels, but goods deflation remains in place, and core inflation is moderating across developed markets.” “Policy to remain restrictive: Central banks are likely at peak rates, and are more data dependent, but will likely continue to sustain restrictive conditions.” “Nimble management still required: The level of premium discounted in risk assets does not appear overly generous, but the declining level of uncertainty that we foresee makes this less of an impediment to owning such assets.” “Bond yields have declined recently: The return potential from global bonds, especially lower-risk government bonds, has improved. This supports our preference for longer duration assets. …” “Opportunities in alternative assets: We are attracted to naturally diversifying “alternatives” such as private assets. …”

Goldman Sachs Asset Management: “Artificial intelligence is now part of the long-term technology opportunity set. Semiconductors, cybersecurity and healthcare are areas to watch as AI transforms industries. Skill in finding the likely winners of tomorrow is crucial. …” Of note, Goldman also underscores the increasing competition of impact investing.

JPMorgan Asset Management: “Our outlook for the new year is “2024”: 2% growth, 0 recessions, 2% inflation and 4% unemployment. A soft landing remains in reach, particularly as disinflation looks set to continue and the Federal Reserve now appears satisfied with its progress.”

Lombard Odier: The bank has 10 investment convictions, not predictions, for 2024. Here’s one: “Private assets to strengthen long-term portfolios. For investors with an appropriate time horizon and risk tolerance, private assets can help diversify portfolios further and offer an additional return and liquidity premium.”

Morgan Stanley: “What might work for investors in this imperfect world? [Our] recommended portfolio construction has a lower-risk profile than our cross-asset benchmark, largely due to strategists’ recommendations for lower-than-average allocations in commodities and emerging-market stocks. [We] suggest an overweight across a broad range of bonds, an equal weight in both stocks and cash, and a significant underweight for commodities.” 

Pimco: “Growth has likely peaked, but so has inflation. …” “As price levels get closer to central bank targets in 2024, bonds and equities should resume their more typical inverse relationship (i.e., negative correlation) – meaning bonds tend to do well when equities struggle, and vice versa. The macro forecast favors bonds in this trade-off: U.S. Treasuries historically have tended to provide attractive risk-adjusted returns in such a ‘post-peak’ environment, while equities have been more challenged.”

State Street Global Advisors: “As we look toward 2024 and the prospect of a significant slowdown in economic activity, we believe sovereign fixed income — and US Treasuries in particular — offers investors an increasingly attractive proposition over the medium term.” As for stocks: “Companies with more resilient earnings streams and stronger balance sheets are better positioned to withstand the pressures of still-tight monetary policy, rising debt, and a deterioration of consumer spending. In short, we favor quality stocks, namely those assets which display these compelling characteristics.”

UBS: “Buy quality bonds. We think slower growth will lead to lower interest rate expectations, and lower yields, in 2024, making high-quality bonds an attractive investment opportunity.” Also: “Buy quality stocks. We expect equity markets to rise broadly, but particularly like quality companies, including those in the technology sector, with the potential to grow earnings against a backdrop of less robust economic activity.”

Vanguard: “[We] anticipate that the U.S. and other developed markets will grapple with mild recessions in coming quarters and that central banks will cut interest rates, likely in the second half of 2024, amid growth challenges and inflation falling toward the banks’ targets. But what happens on the other side of such an economic reset? ‘We believe that interest rates will remain above the rate of inflation,’ said Andrew Patterson, Vanguard senior international economist. ‘The days of ultra-low interest rates are over, and we have greater conviction in this view than we did just a year ago.’ “