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Anthos Annual Investment Outlook 2023-2024

Wouter ten Brinke, Managing Director Client Portfolio Management, explores what's driving markets and investment returns in the mid-to-long term. He also delves into de-globalization: from efficiency to security in a new world order as a special topic.

 

We are delighted to present Anthos Fund & Asset Management (Anthos)’s Annual Investment Outlook 2023 – 2024.

Our theme this year? De-globalization: from efficiency to security in a new world order.

What’s inside?

Head to Chapter 2 to read our special topic: de-globalization, the shifting balance of power in resources & technology. It’s about geopolitics, and shifting to a multi-polar world.

The continued rise of China as an international economic power (China’s size of the economy will overtake the US in 2025) and the re-emergence of Russia as a military force (weaponizing commodity exports to the rest of the world) are behind this. In this world, national security is key for regional economics.

We also look at de-globalization and regionalization. Realizing that the just-in-time globalized economy was not prepared for an exogenous shock (like pandemics and war), countries are rewiring their trade, energy, tax and currency regimes in order to make each country and its partners more resilient. But this resilience will come at a price: higher inflation, lower productivity and – potentially – lower asset valuations.

Onto securing food/energy/technology/supply chains. It’s a big topic. Ensuring resilience and security means supply chains will be re-aligned among like-minded partners: focus on just-in-case inventories rather than just-in-time delivery. Say goodbye to free trade of goods, labour, tech and commodities in favour of ‘friend-shoring’ and ‘free but secure’ trade with aligned partners.

Chapter 3 covers our secular outlook for growth and inflation. Secular means long-term, which is after all Anthos’ playing field. You’ll read about demographics, productivity, China’s structural slowdown in economic growth. For inflation, we’re concerned about fiscal stimulus (aka government spending and tax policies) in tight labour and product markets. We also look at the long-term outlook for interest rates. Hold onto your hats, mortgage borrowers.  

If you want to skip the fire-side reading insights, and get straight to the conclusions, it’s Chapter 4 you’re after. This is our secular investment outlook. Here, we culminate all of our research and insights over the year and offer our views on: the corporate profit cycle, why margin compression is reducing corporate risk taking; the credit cycle, which has entered contraction phase; corporate default cycle, tightening financial conditions mean more defaults; ultimately meaning that higher risk premia will be needed but taking investment risk is still rewarded. This is good news for active, multi-asset investors who invest across liquid and illiquid spaces.

Not forgetting Chapter 5, we give our macroeconomic scenarios 2023 – 2024. We’ve now moved from secular, to a near (ish) term of two years. These are the different lenses we look through to assess and understand what’s happening in the economy and how we expect that will impact returns. They are a useful framework to cut through the noise and keep perspective, especially in such volatile market conditions as the ones we are experiencing.

We hope you enjoy our Annual Investment Outlook, and welcome your comments.

Download the Anthos Annual Investment Outlook 2023 - 2024

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