Opportunities on the Horizon: Investing Through a Slowing Economy

Thematic updates | WEALTH OUTLOOK 2023 | MID-YEAR EDITION | 39 Finding value beyond narrow leadership 1 Proxied usingMSCI ACWorld Index as of May 31, 2023 JOSEPH FIORICA Head of Global Equity Investment Strategy A highly concentrated US tech rally this year masks the value still present in global equities following the 2022 bear market. Economic and profits growth should bottom in the next fewquarters, presenting an opportunity to diversify portfolios into non-US shares, profitable small firms, and still-depressed growth stocks. ƒ Of the $4 trillion in global market cap created so far this year, 89% can be attributed to just 10 companies 1 ƒ While US large caps look expensive relative to prevailing interest rates, we see value in non-US equities and profitable small and mid-sized companies ƒ While we don’t expect global equities to simply surge higher in the year ahead, we see both cyclical and structural tailwinds for non-US shares in the next market cycle ƒ Global dividend growth is another tactical overweight that has seen smaller drawdowns since the bear market began in 2022. While dividend growers tend to lag in early cycle recoveries, we still believe this strategy has a permanent place in core portfolios given their track record of long-term outperformance 4.1