In this edition of VantagePoint, we find that consumers, corporations, and the banking sector remain in good shape, and while US/global economic growth is likely to slow in the second half of 2024 relative to the first, we expect it will remain positive. Although market concentration risk is elevated, given its focus on highly profitable AI-related tech stocks, we would seek to be measured about diversifying such risks.
This publication presents manager performance for 37 asset classes and substrategies, showing the median, mean, and key percentiles of return. Relevant indexes for each asset class are also included to provide market context.
No, not right now. We continue to believe investors should: (1) keep equity allocations aligned with broad policy targets; (2) maintain modest overweights in less expensive areas within equities, such as developed markets value and small caps; and (3) maintain a modest overweight in long US Treasury securities within bond portfolios.
Most risk assets enjoyed strong returns in fiscal year ended June 2024. Developed markets equities led on better-than-expected economic data and the anticipation that central banks would begin easing monetary policies.
In 2023, US private equity performed better than venture capital, but returns for both asset classes trailed those of the public markets, which rebounded strongly from a tough 2022.
This publication presents manager performance for 37 asset classes and substrategies, showing the median, mean, and key percentiles of return. Relevant indexes for each asset class are also included to provide market context.
Building outperforming portfolios in long-only equities is hard work but worth the effort. Engaging in deep research to identify firms with a repeatable competitive edge and strong organization that can stand the test of time is far more relevant than analyzing short-term performance. Selecting the right managers is only the first step. Constructing portfolios requires careful consideration of manager and market dynamics to adjust for shifting factor exposures and avoid unintended bets for which investors are unlikely to be compensated.
Yes. We believe higher-quality US small-cap companies trade at a significant discount to large-cap peers, and their balance sheets have held up better than headlines suggest.
Yes. A record of roughly $925 billion of US commercial real estate (CRE) debt is maturing in 2024 and refinancing needs in future years are also significant.
The 2023 US edition of our annual report on the history of financial markets provides context for the range of returns investors can expect from equities, bonds, and cash; reveals the importance of various components of equity returns; examines the evidence for equity mean reversion; and reviews the relationship between initial valuations and subsequent returns for equities and bonds.