Asset Management
Q4 Investment Outlook for Advisors
Market trends and insights for advisors
Market focus has shifted down the U.S. market-cap spectrum
In the aftermath of the Q2 earnings season and downgrade to earnings estimates, market attention, focus, and performance shifted down the U.S. market-cap spectrum in Q3, from mega-caps to equal-weight.
International equity valuations are attractive relative to U.S. equities
International stocks have been tracking U.S. stocks since the bull market began in October 2022, while outperforming in Q3 amid lower valuations, faster earnings growth, and higher dividend yields.
The Fed started cutting rates, raising reinvestment risks
The Fed’s rate cut in September and likelihood of a soft landing helped fixed income rally in Q3. We expect short-term yields to move lower, while longer-term yield declines may be limited.
Asset allocation opportunities and investment ideas
U.S. equities: Do your clients have too much mega-cap concentration risk?
If so, explore diversifying with stocks of U.S. companies that have high-quality attributes like healthy revenues and cash flow.
Investment ideas:
International equities: Are your clients under allocated to international stocks?
Given the recent-year focus on U.S. mega-cap stocks and AI, your clients may have become underweight international equities.
Investment ideas:
Fixed income: Do your clients have too much cash on the sidelines?
Investment-grade corporate bonds, municipal bonds, and mortgage-backed securities may be worth a look.
Investment ideas:
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