Top investment considerations for financial intermediaries 2024 

Financial intermediaries and wealth managers must navigate myriad market challenges every year. We see five areas we think demand attention for 2024.

Our 2024 Themes and opportunities paper calls the years ahead an “An Age of Agility.” It highlights the fact that the next 12 months abound with unknowns, that it’s essential to be wary of unrewarded risks and that everyone should keep in mind Alexander Pope’s message that “only fools rush in where angels fear to tread.” 

The global investment landscape is undergoing a profound transformation. The once disinflationary effects of globalization are waning, and the world is leaning increasingly toward factionalization and friend shoring. Issues such as resource nationalism, the possibility of “greenflation” due to energy transitions and emerging inflationary pressures highlight this transformation. The past trend of reduced labor costs due to automation and outsourcing is being replaced by challenges that include rising commodity prices and the potentially negative implications of AI. 

With higher interest rates and tighter financial conditions, the spotlight is on alternative capital sources, favoring private lenders. Moreover, as the global community becomes increasingly aware of growing environmental crises and nature-related risks, investment strategies are evolving. The recent framework from the Taskforce for Nature-related Disclosures (TNFD) hints at the dawn of regulatory changes in this space. 

In this report, we look at a notable development — the flattening of the global efficient frontier. In this area, there have been changes in the expected returns for the risk taken on, which have significantly changed the outlook for several asset classes. We therefore set out the ways in which advisors and their clients can enhance their resilience and adaptability. We also look at how they can strategically shape and position their portfolios to flourish in this shifting investment environment. 

We emphasize the importance of a strategic asset allocation review that incorporates structural trends and addresses emerging risks. Such reviews enable portfolios to stay focused on long-term goals amid the noise of short-term fluctuations. We also provide insights on accelerating capital deployment within a multi-sleeve private markets program — a way to target asymmetric alpha in a world of dispersion and dislocation.

As the global community becomes increasingly aware of growing environmental crises and nature-related risks, investment strategies are evolving.
We have identified five issues that we believe financial intermediaries should consider for client portfolios in 2024.

A substantial increase in global bond yields has seen the global efficient frontier rise sharply at the front end, meaning previous efficiency gains of returns against risk may no longer hold true.

Significant shifts in areas such as inflation, interest rates, globalization, technology, resources, climate change and nature all demand a reassessment or revision of both long-term asset allocation and potentially of long-held investment beliefs.

One approach to support agility could be to deploy capital through a multi-sleeve private markets program. As capital calls can vary considerably, thoughtful approaches to multiple allocations can help manage exposure and capital commitments.

A diversified and dynamic collection of alternative risk-and-return alpha streams is one way to respond to an evolving investment landscape. Dedicated and tactical exposure to hedging strategies can help bolster the overall protection of a portfolio.

With rising yields putting credit investing back in the spotlight, financial intermediaries may want to explore opportunistic multi-asset credit, unconstrained credit or private market credit opportunities as they look for alternative credit alpha.

Top investment considerations for financial intermediaries 2024

Learn more about the top five considerations for wealth managers and financial intermediaries in 2024.
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