Dear valued clients,
Our 2023 call for investors to put cash to work in investments continued to pay off in 1Q24.
Despite the shift in market expectations from seven rate cuts at the start of this year to just three cuts today, risk assets, particularly equities, continued to rally. Our thematic favourites of technology and AI, as well as quiet luxury, scored with hefty gains. Gold was also a strong performer for our portfolios.
As an interest-rate sensitive asset class, bonds did not register capital gains but continued to accrue interest income of more than 5% p.a. from investment grade corporates.
Barring an unexpected resurgence of inflation, a scenario of slow rate cuts amid a soft landing in the US economy bodes well for equities and credit. We advise investors to stay invested, and deploy any excess cash in well-balanced, diversified portfolios.
On equities, stay with profitable companies with deep economic moats. These may include sectors that are non-tech related, as we see the market broadening into other sectors, in particular, energy and healthcare.
On bonds, stay with A/BBB investment grade corporates with a measured exposure to BB+ rated credits. Given the inverted yield curve, the sweet spot for duration is in the 3-5Y region.
In this publication, we reiterate our call on quality Big Tech. Additionally, we dive into the various strategies within private markets, as well as the approach to fully capture the benefits of investing in private equity and debt within a well-diversified portfolio.
Enjoy the read and I wish you a steadfast quarter of investing.
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