Adviser-to-client template: 2024 Outlook

For financial advisers to use with clients. This document is intended to support your service proposition to clients. It is produced by our investment writers with a deliberately light tone and structure. However, these are guidance paragraphs only. It is not guaranteed to meet the expectations of regulators or your internal compliance requirements. If you wish to remove or amend any wording, you are free to do so. However, please bear in mind that you are ultimately responsible for the accuracy and relevance of your communications to clients.

Dear client,

As we near the end of 2023, I want to provide you with some guidance on how we are thinking about the investment landscape for 2024. Of course, if you have any questions relating to this, please do reach out to discuss. We otherwise wish you a great lead-up to the festive season and look forward to connecting in due course.

Investing Outlook for 2024

It is helpful to look back over 2023 and acknowledge it has been a delicate year for investors. Yet, we’ve been relatively pleased with how we’ve navigated such an environment given the pace of change and the major increase in interest rates.

In some respects, this sets us up for a more positive investment outlook for 2024, with a much better starting position for money invested today due to the higher rates. Yet, our overall approach for 2024 will be a blend of continued caution and optimism. We understand market volatility can be daunting, but it’s important to remember that periods of market volatility and pessimism are a normal part of the journey to reach financial goals. Moreover, pessimism often creates some of the better investing opportunities. With this in mind, we see a blend of fixed income and selected equity markets playing a role, which you currently hold.

Risks and Opportunities Ahead                                                                         

Part of the reason for the balance between caution and optimism is that anything can happen in a given month or year. This is especially relevant in a fast-changing inflation setting.

To manage this scenario, we 1) emphasise risk management, and 2) take a long-term perspective to create value in your financial plan. Prudent investors who stay the course and focus on matching their portfolio objectives to their goals can create long-term value. These are core principles we apply consistently and we believe will continue to serve you well in 2024.

If you’d like a detailed view of what might lie ahead, the Morningstar 2024 Outlook is fresh off the press and worthwhile reading. We’ve summarised the key takeaways below:

1. Economic backdrop – the outlook includes a slow economy, lower inflation and eventually lower interest rates. This is supportive of classic multi-asset portfolios investing in bonds and equities.
2. New risks, including the wars and upcoming election – the collection of concerns is daunting, but it’s worth remembering that not every risk requires a whole new portfolio to survive its realisation. A well-calibrated portfolio should weather most external shocks fairly well.
3. Opportunities and risks of artificial intelligence – as companies of all shapes and sizes try to take advantage, we could see profit margin expansion, but it carries risk too. The principles of good investing still apply.
4. Taking advantage of higher interest rates – the transformation in the income landscape is meaningful, with certain asset classes gaining in attraction. Bonds in particular have become more attractive as interest rates have increased.

All of these points relate to your portfolio nicely. While risks need to be managed, there are clear opportunities for gain. By staying informed, maintaining a diversified portfolio, and focusing on the principles of good financial planning, we can navigate the changing investment landscape and make meaningful progress towards your goals.

Again, if you have any questions or would like to discuss your portfolio in more detail, please don’t hesitate to reach out. We are here to help.

Regards,

Adviser

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