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The views expressed are those of the authors at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.
2024 is nearly half over, and from a macroeconomic standpoint, things haven’t unfolded the way many market watchers and policymakers expected. Growth has surprised to the upside. Inflation has remained stubbornly above target. Job growth is stronger than anticipated. And investors are bouncing between interest-rate pessimism and corporate-profit optimism. All of this is set against a complex macro backdrop of heightened geopolitical risk and critical elections in the US and around the world. This Mid-year Investment Outlook collection offers ideas from multiple Wellington investors, strategists, and other professionals on risks and active opportunities amid continued macro regime change.
At Wellington, we do not have one unified “house view” on the global economy and markets. That’s because we know that the best investment ideas are often uncovered when a diverse talent pool is encouraged to bring forward a range of unique, independent, and (at times) divergent perspectives. By debating new ideas and sharing research across asset classes, regions, and investment disciplines, our investors can uncover hidden insights, risks, and opportunities.
As we look to the second half of 2024, Macro Strategist Eoin O’Callaghan is watching G7 governments’ continued excessive deficit spending and the potential for it to fuel higher rates; Macro Strategist Juhi Dhawan is tracking the nuanced story of the all-important US consumer, highlighting the notable divergence between consumers who are thriving and those who are just surviving; Macro Strategist Michael Medeiros is following the starkly different policy agendas of Biden and Trump in terms of how they may affect the supply side of the US economy; and Fixed Income Portfolio Manager Brij Khurana is looking at the root causes of higher inflation and the policy path that is paving the way to the Fed’s target rate.
Adam Berger and Nick Samouilhan, members of our Investment Strategy & Solutions Group, believe that hedge funds and liquid alternatives can provide investors with the flexibility they need to pursue returns and mitigate risks amid continued shifts in the macro environment. In their mid-year outlook for alternative investments, they offer six ideas that could help active investors thrive amid the divergence, disruption, and dispersion created by ongoing regime change.
Private Equity Team members Michael Carmen, Will Craig, and Mark Watson are encouraged by the healthier environment for venture capital as they explore trends they believe will propel private equity markets going forward including: a growing emphasis on capital efficiency, AI valuations, signs of recovery in the IPO market, and more. Amid recent headlines about private credit, Emily Bannister, Emeka Onukwugha, and Elisabeth Perenick — members of our Private Credit Team — believe that disintermediation and the convergence of public and private markets are among the key drivers of opportunities in this asset class.
As they look ahead to the second half of 2024, Fixed Income Team members Campe Goodman and Amar Reganti consider how to capitalize on potential rate shifts and relative value among credit sectors. They believe that inflation should remain relatively stable in the absence of major shocks, leading to lower interest-rate volatility. With spreads at historically narrow levels, they see diminished relative value in investment-grade and high-yield corporate bonds. Instead, they see opportunities in securitized sectors tied to the US consumer and housing markets and in convertible bonds.
How should investors navigate today’s narrow equity market? Macro Strategist Nick Wylenzek and Equity Strategist Andrew Heiskell explore answers and see opportunities in underappreciated market segments like small cap, value, and Japanese equities. They’re keeping an eye on the stickiness of US inflation, the sustainability of Europe’s Goldilocks scenario of disinflation and accelerating growth, and developments in China, where a pickup in growth momentum remains a critical catalyst for equity investors to reengage.
