Asset Allocation Perspectives 2024 Outlook

January 10, 2024 — This presentation provides an overview of our market outlook and key themes, and it illustrates how Sage is positioned in the current environment.

Key Themes

Volatility Reversal

  • Expect equity volatility to reverse from historically low levels as sentiment is too dependent on a soft-landing scenario and front-loaded Fed cuts in 2024
  • Rate volatility was extreme in 2023 but should be more muted as we gain clarity on an easing path

Income-Focused Market

  • Expect strong flows into broad fixed income and credit as both institutional accounts and retail take advantage of yields and lock in duration
  • 2023 was a rare occurrence where bond yields moved above equity earnings yields; historically, this is a good signal to add fixed income, especially into peak rates

Lean Toward Quality

  • Attractive yields but tight spreads suggest that it doesn’t pay to give up quality for minimal yield pickup
  • For the credit allocation security selection will be key; a tactical addition of MBS also makes sense

  • DATE: January 10, 2024
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