Indeed, many key questions remain open for debate and close calls, such as whether the U.S. economy will see a soft or hard economic landing, the direction of Federal Reserve (Fed) policy, if the 10-year U.S. Treasury yield has peaked, the path of inflation, and how the election will shape the year. Key investment questions also remain, such as whether the market broadens away from several dominant growth names, and the right price and time for the underperforming small caps, value, and international markets.
Given these crosscurrents, we advise investors to remain closely aligned with their longer term target allocations for stocks, bonds, and cash to start the year.
It’s not yet time to move to offense or defense. But be prepared—that time will come.
Importantly, we continue to express differentiated views within asset classes. Here, our long-standing bias for the U.S. over the international markets remains in place, alongside our continued preference for large caps over small caps. We maintain an emphasis on high-quality fixed income.
Investors should be prepared that our investment positioning by the end of the year could look markedly different than how we enter 2024. As usual, we’ll follow our process, which has served us well over time, and let the weight of the evidence be our guiding light.
Join Co-Chief Investment Officer and Chief Market Strategist Keith Lerner as he summarizes our annual investment outlook with an in-depth look at the economy, markets, and portfolio positioning.
Model : "disclaimer"
Position : "left"
Annual Outlook 2024
(Visual Description: There are a lot of potential changes on the horizon.
The economy
The election
The market
Investment Advisory Group
Be prepared
Annual Outlook 2024
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Truist title and logo, Wealth
Keith Lerner, Wealth Co-Chief Investment Officer, Truist)
Keith: This past year, we have seen the economy prove fiercely resilient and the stock market exceeded most expectations.
Headed into twenty twenty four, keeping an open mind remains of utmost importance as the post pandemic playbook remains challenged.
And it will be just as important for investors to be prepared.
Be prepared that twenty twenty four will likely not be a year to keep an investment strategy on autopilot.
In twenty twenty four, we will see forty elections around the globe, including here in the US. While the Federal Reserve continues a delicate balance are trying to cool the economy enough to tame inflation without causing a recession.
Key investment questions also remain such as whether the market broadens away from several dominant growth companies.
Given these cross currents, we advise investors to remain closely aligned with their long term target allocations for stocks, bonds, and cash to start the year.
It is not yet time to move to offense or defense yet be prepared. That time will come.
Importantly, we continue to express our preferences within asset classes.
Here, our long standing buys for the US over international markets remains in place alongside our continued preference for large caps over small caps.
We maintain an emphasis on high quality fixed income.
A reasonable baseline return assumption for the S and P five hundred is in the range of five to ten percent, but the possibility of a much more dramatic move is elevated based on the path of the economy and elections.
Election years also tend to be bumpier and investors should be prepared for normal pullbacks during the year which should provide investment opportunities.
We continue to have a less positive view on emerging markets where China represents about thirty percent of the index and earning trends remain weak.
Turning to fixed income, a painful three year long reset to significantly higher yields creates better starting points for higher quality bonds.
US treasury yields have likely peaked this cycle after hitting the highest level since two thousand seven. Current yields should appear increasingly attractive relative to inflation and deserve consideration among investors with significant cash balances to deploy.
We advise limiting exposure to riskier segments of fixed income. To recap, we entered twenty twenty four, maintaining our bias to US loss cap and high quality fixed income as we await tactical opportunities.
Investors should be prepared that our investment by the end of the year could look much different than how we enter twenty twenty four. Per usual, we will follow our process, which has served us well over time. And let the weight of the evidence be out guiding light.
To learn more about our views and recommended investment position, Please take a look at our annual outlook publication.
Your truest advisor can help you learn more about how our investment themes will impact your portfolio. Importantly, this is a starting point. We look forward to keeping you informed on our views as the year unfolds.
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Truist title and logo)
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Asset classes are represented by the following indexes. An investment cannot be made directly into an index
S&P 500 Index is comprised of 500 widely held securities considered to be representative of the stock market in. general
Equity is represented by the MSCI ACIVI captures large and mid cap representation across 23 Developed Markets (DM) and 24 Emerging Markets (EM) countries*. With 2.897 constituents, the index covers approximately 85% of the global investable equity opportunity set
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U.S. Large Cap Equity is represented by the S&P 500 Index which is an unmanaged index comprised of 500 widely held securities considered to be representative of the stock market in general
U.S. Mid Cap is represented by the S&P Mid Cap 4008 provides investors with a benchmark for mid sized companies. The index, which is distinct from the large cap S&P 5009, measures the performance of mid sized companies, reflecting the distinctive risk and return characteristics of this market segment
US Small Cap Core Equity is represented by the SAP 600 Small Cap Index which is a measure of the performance of the small cap segment of the US
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International Developed Markets is represented by the MSCI EAFE Index is an equity index which captures large and mid cap representation across 21
Developed Markets countries* around the world, excluding the U.S, and Canada With 799 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. Emerging Markets is represented by the MSCI Emerging Markets Index captures large and mid cap representation across 24 Emerging Markets (EM) countries*. With 1,386 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.
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US. Mortgage-Backed Securities are represented by the Bloomberg U.S. Mortgage Backed Securities (MBS) Index which covers agency mortgage. backed pass-through securities (both fixed-rate and hybrid ARM) issued by Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC) U.S. Investment Grade Corporate Bonds are represented by the Bloomberg US. Corporate Investment Grade Index which is an unmanaged index consisting of publicly issued U.S. Corporate and specified foreign debentures and secured notes that are rated investment grade (Baa3/BBB- or higher) by at least two ratings agencies, have at least one year to final maturity and have at least $250 million par amount outstanding.
U.S. High Yield Corp is represented by the ICE Bold US. High Yield Index tracks the performance of below investment grade, but not in default, US dollar denominated corporate bonds publicly issued in the U.S domestic market, and includes issues with a credit rating of EBB or below, as rated by Moody's and SSP
Floating Rate Bank Loans are represented by the Morningstar LSTA Leveraged Loan 100 Index. The index represents tradable, senor-secured, US; dollar-denominated non-investment grade loans
Emerging Markets Equity is represented by the MSCI M Index which is defined as a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets countries
Intermediate Term Municipal Bonds are represented by the Bloomberg Municipal Bond Blend 115 Year (1-17 Yr.) is an unmanaged index of municipal bonds with a minimum credit rating of at least Baa, issued as part of a deal of at least $50 million, that have a maturity value of at least $5 million and a maturity range of 12 to 17 years.
US Core Taxable Bonds are represented by the Bloomberg I S. Aggregate Band Index is a broad-based flagship benchmark that measures the investment grade, U.S dollar denominated, taxed-rate taxable bond market The index includes Treasuries, government related and corporate securities,
MBS (agency fixed rate and hybrid ARM pass throughs). ABS and CMBS (agency and non agency)
U.S. IS Corporate Bonds are represented by the Bloomberg US. Corporate Bond index measures the investment grade, fixed-rate, taxable corporate band market. I includes U S D denominated securities publicly issued by US, and non US industrial, utility and financial issuers
US Hgb Yield Corporate Bonds bee represented by the ICE Bold US I Index which as an index that tracks US dollar denominated debt below investment grade corporate debt publicly issued in the US domestic market.
international developed markets bonds unhedged are represented by the ICE BoA Global Government ex US Index which tracks the performance of publicly issued investment grade sovereign debt denominated in the issuer's own domestic currency exuding all securities denominated in US dollars in order to quality for inclusion in the index, a country (i) must be a member of the FX-G10 er Wester Europe, (a) must have an investment grade rating.
US preferred securities are represented by the ICE BoA Preferred Stock Fixed Rate Index which tracks the performance of foxed rate US dollar. denominated preferred securities issued in the US domestic market
US. TIPS are represented by the ICE BoA US Treasury Inflation Linked index which as an unmanaged index comprised of US Treasury inflation Protected Securities with at least S1 billion in outstanding face value and a remaining term to final maturity of greater than one year.
High yield municipal bonds are represented by the Bloomberg MY Municipal Bond Index which is an unmanaged index made up of bonds that are non. investment grade, unrated, or rated below with a remaining maturity of at least one year
The HFRI Fund Weighted Composite Index which as a global, equal weighted index of single manager funds that report to HFR Database Constituent funds report monthly net of all fees performance in US Dollar and have a minimum of $50 Million under management or a twelve(12) month track record of active performance.
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