Goldman Sachs Asset Management has released its highly anticipated 2024 outlook report, entitled "Embracing New Realities". This provides insights into the rapidly evolving economic landscape and the challenges and opportunities that lie ahead.
Several key factors are reshaping the global economy. One trend is the commitment of major central banks to maintain higher interest rates for an extended period. Additionally, economic growth trajectories and inflation patterns across different economies are showing signs of increasing divergence. Against this backdrop, the world is set to witness an election super cycle amidst elevated geopolitical risks. Concurrently, megatrends such as disruptive technology and sustainability are exerting profound transformations on various industries.
The report underscores the importance of adaptability in the face of these dynamic changes. Goldman Sachs Asset Management acknowledges that investors have already made significant adjustments in recent years to contend with rising geopolitical risks, surging inflation, and the disruptions caused by the COVID-19 pandemic. However, the evolving economic landscape calls for further adjustments. The report anticipates that investors will encounter increased performance dispersion across asset classes, sectors, and regions.
Several strategies are highlighted. Active investment strategies, diversification, and risk management will play pivotal roles in delivering alpha and mitigating risks. An integrated approach to portfolio management, combining traditional and alternative investments, is recommended to enhance diversification and performance potential. Emphasis is placed on long-term disruption resulting from sustainability trends and technological innovation. In particular, artificial intelligence (AI) is expected to position portfolios favourably in the midst of global economic transformation.
The perspectives from across Goldman Sachs' investment teams are categorized five key themes that are expected to influence markets and investment strategies in 2024:
- Macroeconomy: Living with Higher for Longer
- Geopolitics: Roadmaps for a Reshaped World
- Disruptive Technology: Innovation and AI Acceleration
- Sustainability: Investing with Impact
- Portfolio Construction: Thinking Differently