Advisers predict strong year for US and UK equities

  • Over 40% of the global population eligible to vote in 2024
  • With this backdrop, Aegon research sheds light on what advisers predict will be asset class winners and losers in 2024.
  • US equities (49% of advisers) comes out on top despite valuations being at levels not seen since the and post-Covid era. 
  • Following closely behind are UK equities (44%) and emerging market equities (41%).
  • On the other hand, 60% of advisers expect commercial property to perform the least favourably, with cash (36%) and gilts (28%) completing the top three worst return prediction positions.

Research conducted by Aegon indicates that financial advisers anticipate recent positive performance in equities will continue in 2024. The Adviser Attitudes study, involving 200 advisers, asked which three asset classes they believe will deliver the most favourable and least favourable returns for their clients over the next 12 months.

Asset class winners…

2024 is a pivotal year for global elections, with over 40% of the world’s population potentially having the opportunity to vote. Against this politically charged backdrop, 49% of advisers selected US equities as the asset class poised to provide the most significant returns for clients in 2024. Following closely behind is UK equities (44%) and emerging market equities (41%). 

And losers…

On the other end of the table, 60% of advisers cited commercial property as the asset class that they expect to be the worst-performing in 2024. Only 2% of advisers said they expect this asset class to generate the best returns for clients. The top three worst-performing predictions closed with cash (36%) coming in second and gilts (28%) coming in third.

Chart: Which asset classes do you expect to generate the best/worst returns over the next 12 months (select up to three)1?

Anthony McDonald, Head of Portfolio Management at Aegon, said:

“After outperforming for each of the last five years and being at the centre of the technology and AI revolution, US equities seem unstoppable at first sight, and it seems reasonable to expect them to continue leading the market. However, on long-term valuation measures they are now expensive, trading at levels only previously seen in the dotcom and post-pandemic bubbles. This feels unsustainable, and it is a key reason why we’re underweight in US equities.  

“In contrast, UK equities look more reasonably valued. We’re particularly positive on smaller companies, which tend to be more sensitive to the domestic economy. Despite facing stagnant growth over the past 18 months, which tipped into a hopefully short recession in late 2023, we believe the economic and market outlook for the UK may be overly pessimistic. The 41% of advisers favouring UK equities for top returns in 2024 could be right to sense that even a modest recovery could boost a market that seems to reflect low investor expectations. 

“Undervalued asset classes such as emerging market equities also have the potential to have their time in the sun should political and policy changes influence markets.

“Conversely, high interest rates are likely to be a headwind and structural post-pandemic changes to our working and consumption habits also represent challenges to established sectors, as well as opportunities elsewhere.

“In the wake of ongoing market volatility, and with 2024 set to be a year of political change, it’s no surprise that advisers hold varying opinions on the best investment approach. But in uncertain times like these, expert input with a continued focus on diversification and long-term investment fundamentals is key when building client portfolios.”

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