Advisers are predicting that 2024 will be a strong year for both US and UK equities.
New research from Aegon, published today (28 March) sheds light on what advisers believe will be the asset class ‘winners and losers’ for the remainder of the year.
The Adviser Attitudes study asked 200 advisers which three classes they believe will deliver the most favourable and least favourable returns for their clients.
US equities (49% of advisers) came out on top, despite valuations being at levels not seen since the dot.com and post-Covid era.
Following closely behind are UK equities (44%) and emerging market equities (41%).
On the other hand, 60% of advisers expect commercial property to perform the least favourably, with cash (36%) and gilts (28%) completing the top three worst return prediction positions.
Only 2% of advisers said they expect commercial property to generate the best returns for clients.
Aegon head of portfolio management Anthony McDonald said: “After outperforming for each of the last five years and being at the centre of the technology and AI revolution, US equities seem unstoppable at first sight, and it seems reasonable to expect them to continue leading the market.
“However, on long-term valuation measures they are now expensive, trading at levels only previously seen in the dotcom and post-pandemic bubbles.
“This feels unsustainable, and it is a key reason why we’re underweight in US equities.
“In contrast, UK equities look more reasonably valued. We’re particularly positive on smaller companies, which tend to be more sensitive to the domestic economy.
“Despite facing stagnant growth over the past 18 months, which tipped into a hopefully short recession in late 2023, we believe the economic and market outlook for the UK may be overly pessimistic.
“The 41% of advisers favouring UK equities for top returns in 2024 could be right to sense that even a modest recovery could boost a market that seems to reflect low investor expectations.
“Undervalued asset classes such as emerging market equities also have the potential to have their time in the sun should political and policy changes influence markets.
“Conversely, high interest rates are likely to be a headwind and structural post-pandemic changes to our working and consumption habits also represent challenges to established sectors, as well as opportunities elsewhere.”
He said that in the wake of ongoing market volatility, and with 2024 set to be a year of political change, it’s “no surprise that advisers hold varying opinions on the best investment approach.”
“But in uncertain times like these, expert input with a continued focus on diversification and long-term investment fundamentals is key when building client portfolios,” he added.
Good grief, are well still making this nonsense up every year
I wonder…sometimes…if I am the only one in retail FS who actually reads market reports & analysis outside aligned interest like Fund Managers??
Small/Mid Caps. have performed badly over last 5 years, and the pressure is really on over next 12-36 months as they queue up to renegotiate credit etc.
The rise in US & US main share indices have been focused upon a very narrow amount of shares in two lines of country – Energy and Tech (armaments are worth a look + mobile storge, E.g. Container tanks.
UK is in a recession… and it is deeper than anyone seems to realize – unemployment is 3.5% – yet, the number of economically inactives is 10M+… They are, effectively for the economy, unemployed albeit through choice.
Interest rates seem oblivious to markets – BoE, like the Fed. want to see joblessness, fewer completions, and inventories draining before more rate cuts will happen.
That M2 is at a record low for this ‘current cycle’ – whatever that means – shows that there is little enough free cash/call to be confident of a consumer led recovery… As A. Bailey said. in November 2021..”Inflation is supply side driven, putting up interest rates will not make any difference history tells us”
More recent history confirms the old adage… actions speak louder than drivel…errm…words.