Citi Wealth Outlook 2024 - At a Glance

INVESTMENT PRODUCTS: NOT FDIC INSURED • NOT CDIC INSURED • NOT GOVERNMENT INSURED • NO BANK GUARANTEE • MAY LOSE VALUE Wealth Outlook 2024 AT A GLANCE Slow then grow: Investing in the markets’ big reset • Global GDP growth slows to +2.2% in 2024, strengthens to +2.8% in 2025 • Despite slowdown, no broad-based economic collapse • US to lead the world in this “slow then grow” pattern • The US Fed is done raising interest rates, likely to cut moderately in 2024 • US inflation to dip to 2.5% by end-2024 • 10-year Treasury yields set to drop from 5% to c. 3.75% • Weaker US dollar to help Europe and Asia to grow after “slow” • Global earnings per share up 5% in 2024 and 7% in 2025 • Main risks: further supply shocks or deeper weakening in China • Elections, geopolitics may cause investor anxiety without changing markets’ course Taking advantage of markets' big reset The global economy looks set for further recovery, with investor expectations resetting upward. We see potential portfolio opportunities near and long term. Long-term valuations suggest this may be a good time to build or add to globally diversified core portfolios across asset classes - see OUR 2024 10-YEAR STRATEGIC RETURN ESTIMATES (SREs). In 2024, we see broadening equity performance. US small- and mid- cap growth shares with solid balance sheets are among potential opportunities across global equities. We seek portfolio income and diversification via intermediate-term US Treasury and quality USD corporate bonds, potentially locking in peak interest rates. Potential opportunities for suitable investors also lie in private credit and US municipal bonds. In addition to their stronger SREs in 2024, we see additional diversification benefits for suitable and qualified investors with alternative investments such as private equity, real estate, and hedge funds. To complement core portfolios, we set out high conviction opportunistic positions for the nearer term, such as Investing with and in unregulated financial companies. Unregulated financial companies are non-bank financial institutions and not subject to banking regulations. We advocate exposure to long-term economic growth drivers – see G2 polarization, Increasing longevity and healthcare innovation. Our 10-year strategic return estimates 1 1 2024 Annualized SREs Global Equities 8.7% Developed Market Equities 8.2% Emerging Market Equities 12.8% Global Fixed Income 5.8% Investment Grade Fixed Income 5.4% High Yield Fixed Income 7.9% Emerging Market Fixed Income 8.1% Cash 4.3% Hedge Funds 11.5% Private Equity 19.5% Real Estate 10.9% Commodities 2.7% Our top 10 high-conviction opportunistic investments We believe a long-term core portfolio should contain about 85% of a client’s wealth outside of their business assets and homes. An opportunistic portfolio can perhaps complement these holdings, seeking to strengthen diversification, potentially improve risk-adjusted returns or both. In Wealth Outlook 2024, we detail the following opportunistic ideas: 1. Semiconductor equipment makers 2. Cybersecurity shares 3. Western energy producers, equipment and distributors 4. Copper miner equities and clean energy infrastructure 5. Medical technology & tools companies 6. Defense contractors 7. Private capital asset management firms 8. The Japanese yen and yen-denominated tech and financials 9. Private credit and structured debt securities 10. Normalization of the US yield curve