ACTIVELY CAPITALISING ON A NEW MARKET REGIME
Investment implications and opportunities amid new macro realities
A BUMPY ROAD TO A NEW PARADIGM
Markets rebounded in 2023 as central banks signaled an impending conclusion to the interest-rate hiking cycle. While resilience and moderating inflation have been prominent economic themes, heightened geopolitical risks and softening consumer trends add uncertainty to the outlook.
2024 INVESTMENT THEMES
Against a backdrop that warrants selectivity and the flexibility to act as conditions evolve, PGIM asset managers highlight key trends set to shape 2024 and identify opportunities that they believe show significant promise.
Actionable Ideas
Extend duration
With the Fed hike cycle nearing an end and markets pricing in rate cuts in 2024, investors may benefit from extending duration now and locking in higher rates.
Asset classes to consider:
- Multi-sector bonds
- Intermediate bonds
Seek high-quality relative value opportunities
Extreme volatility since 2022 has compressed valuations across fixed income sectors, creating attractive relative value opportunities in key spread sectors.
Asset classes to consider:
- High yield bonds
- Emerging market debt
Focus on structural trends with resilient demand
Major transformative changes are afoot globally in areas with resilient demand and growth that do not rely on the economic environment. Structural changes, including digitalisation, demographic, and decarbonisation trends, are changing the investment landscape across industries.
Asset classes to consider:
- U.S. growth stocks
- Global equities
- Emerging market equities
- Thematic equities
- Public REITs
Diversify with alternative return sources
Public markets are vulnerable to short-term market noise with prices often overshooting to the downside based on shifting investor sentiment. Private markets benefit from a longer-term view and less frequent mark to market, often providing investors a smoother ride.
Asset classes to consider:
- Private credit
- Private real estate
References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. The securities referenced may or may not be held in the portfolio at the time of publication and, if such securities are held, no representation is being made that such securities will continue to be held.
The views expressed herein are those of PGIM investment professionals at the time the comments were made, may not be reflective of their current opinions, and are subject to change without notice. Neither the information contained herein nor any opinion expressed shall be construed to constitute investment advice or an offer to sell or a solicitation to buy any securities mentioned herein. Neither PFI, its affiliates, nor their licensed sales professionals render tax or legal advice. Clients should consult with their attorney, accountant, and/or tax professional for advice concerning their particular situation. Certain information in this commentary has been obtained from sources believed to be reliable as of the date presented; however, we cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as of the date of issuance (or such earlier date as referenced herein) and is subject to change without notice. The manager has no obligation to update any or all such information; nor do we make any express or implied warranties or representations as to the completeness or accuracy.
Any projections or forecasts presented herein are subject to change without notice. Actual data will vary and may not be reflected here. Projections and forecasts are subject to high levels of uncertainty. Accordingly, any projections or forecasts should be viewed as merely representative of a broad range of possible outcomes. Projections or forecasts are estimated based on assumptions, subject to significant revision, and may change materially as economic and market conditions change.
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