This year is already shaping up to be a tough one for investors to navigate, with heightened debate over central bank moves, prospects for economic slowdowns and crucial elections around the world all weighing on fund managers’ minds.
Against this backdrop, Bloomberg News asked executives at major investment firms with almost $2 trillion in combined assets under management about where they plan to put their money in 2024.
From outsourced pharmaceutical service providers to longer-duration US Treasury bonds and private credit deals, chief investment officers from Singapore to Switzerland are looking for long-term growth and betting the slowing economy has finally pushed asset prices down to create a buyer’s market.
GIC Pte CIO Jeffrey Jaensubhakij sees a year of heightened risks from “higher for longer” interest rates eating into corporate finances to geopolitical problems and even artificial intelligence forcing companies to make expensive adjustments. That means more opportunities to become a reliable lender for businesses needing capital.
“Higher interest rates and tight credit availability make new deployment in private credit an area of focus,” he said, adding that inflation hedging through real assets remained important. “In real estate, fundamentals remain resilient in logistics, student accommodation and hospitality.”
And with climate change risk continuing to rise, the Singaporean sovereign wealth fund is looking at investments that help with the energy transition.
For Pictet Wealth Management CIO and head of investments César Pérez Ruiz, energy independence and the push to combat climate change is a key theme for deals. But that doesn’t equate to obvious sectors like solar panels or electric vehicles.
“I want to buy the beneficiaries — the companies that are going to do the digitalization, the companies that are going to do the infrastructure investments,” he said, citing Schneider Electric SE as an example. “There are going to be industrial companies that I call ‘the new staples’.”
With China’s property, consumption and technology firms all experiencing continued volatility, Ruiz remains cautious about the outlook there, finding many similarities with the Spanish housing crisis more than a decade ago that continues to have an effect today.
“I prefer the rest of the world first,” he said, adding that Europe and Japan were attractive markets for investments, especially entertainment, consumption, robotics and digital services companies that service the domestic market in the latter.
“If there is recession, small caps will outperform big caps because everyone is hiding in big caps,” he said.
Partners Group: $147 billion
Unlike many of his peers, Partners Group Holding AG CIO Stephan Schäli still sees bright spots in China, especially in areas like pharmaceutical companies where valuations that exploded at the peak of the Covid-19 pandemic have started to become more affordable as they hunt for growth capital.
“We’re global investors so we don’t exclude China,” he said. The outsourcing of pharmaceutical services from drug development to manufacturing and packaging firms gives opportunities, both in China and other Western markets, he added.
While Schäli is relatively cautious on office properties, he echoes GIC’s penchant for last-mile logistics assets as well as Pictet’s enthusiasm for companies that will benefit from the rise of AI and environmental concerns.
“The IT service sector is changing so companies able to implement AI and help other companies get that done are an attractive topic,” he said. Companies that provide ESG-related services are also a target. “We invested in the global leader of cleaning pipelines. So that’s making them really clean and making sure they don’t have any negative environmental impacts.”
China Asset Management: 1.89 Trillion Yuan ($263 billion)
China’s market may have more upside surprises than downside in 2024 even as the nation’s economic slowdown and property crisis weigh on investor confidence, according to Richard Pan, CIO of global capital investment at Beijing-based China Asset Management Co.
Catalysts for a turnaround include bigger-than-expected interest-rate cuts in China as the Federal Reserve’s anticipated end of its hiking cycle may give more room for China’s policymakers, and even stronger support for the ailing property market such as the removal of home-purchase curbs in top-tier cities.