With many market participants believing that central banks around the world are now finished with raising their interest rates, markets are looking forward to 2024 and the prospect of stimulus from interest rate cuts and the possibility of tax incentives as many governments around the world enter election years. TAM remains on the front foot in terms of investing into areas of bonds and equities we see as particularly attractive, such as corporate bonds, UK equities, emerging markets and alternatives, that offer real value right now. Given this, should positivity continue into the new year, we remain poised to capture that value for our investors’ portfolios to begin the process of restoring confidence and returning investors to profit after a couple of challenging years. Likewise, we are not totally immune to the potential of a recession that would place further strain on markets in 2024. We will remain vigilant and take action to reduce the level of risk within our models should this become necessary.
Don’t discount bonds! We recently released a note talking about the dire situation in the global bond market, specifically the US treasury market, which has hit levels usually associated with financial stress much more severe than we are currently seeing. This to us represented an opportunity to not only buy into one of the safest assets on the planet - US government bonds - but to do it at historic levels of value. Since then, the US treasury market has started coming back to life with the index posting some of the best monthly performances we have seen in a long time. Not only does the performance of these bonds look good against a backdrop of a poor market in 2024, but a couple of good months of gains from mainstream bonds has delivered in the region of what investors are earning on their cash deposits - over an entire year rather than just two months! It goes to show, there is something to be said about staying invested and staying the course because when markets do finally break out, it doesn’t pay to be sitting in cash on the sidelines.
The 28th United Nations Climate Change Conference (COP 28) was eagerly eyed by investors, as we approach the end of what will be the hottest year on record. Sadly, 2023 will also be remembered as the year which saw the highest carbon emissions from fossil fuels ever. Held in the United Arab Emirates rather controversially, due to their ties to oil production, global leaders have however for the first time agreed to transition away from fossil fuels, as well as tripling renewable energy capacity to 2030, making up 40% of global electricity generation by 2030. Unsurprisingly this sparked a rally in sustainable related assets in recent weeks.
If you would like to speak with us about these TAM Bites, or to discuss our discretionary investment management services in general, please get in touch with our UK Business Development Manager today.