Quarterly Investment Report – July 2024

Slowing but Growing

Recent data suggests a potential soft landing for the global economy, as an increasing number of central banks are cutting rates to sustain growth amidst slowing momentum and inflation.

Below is a summary of our latest quarterly report, which examines the key themes driving markets, along with the risks and opportunities for the second half of the year and beyond.

Summary of latest insights

• Broader Growth Expected – The prospect of lower rates in the second half of 2024 has boosted equity market valuations and raised earnings expectations across diverse regions and sectors.

• Opportunities and Risk – A softer policy environment could benefit both equities and bonds, although a consolidation period is anticipated following a strong start to the year. The evolving global backdrop presents both opportunities and risks, signalling either a bullish expansion of earnings beyond global tech giants or a bearish sign of inflated expectations.

• Overdue Correction – We interpret the recent weakness in global equities as an overdue correction in an overbought segment of the market, particularly U.S. mega caps. This correction is driving a rotation away from global tech giants into other sectors that have lagged, such as small-mid caps.

• Asset Allocation Change – In response, our Advisory Board has adjusted their stance on global equities to neutral and increased allocations to active managers who can capitalise on undervalued opportunities. We have reduced our weight on Australian listed property (A-REITs), taking profits after a robust recovery from cyclical lows and due to escalating concentration risk within the index.

^{General Advice Warning: Any comments in this communication do not consider your objectives, financial situation or needs. Before acting on any general advice, consider whether it is appropriate for you.}