Wealth Outlook 2024 - Slow then grow

21 Wealth Outlook 2024 | Our outlook FIGURE 10 US 5-year Treasury yield index Yield (%) 5-year UST Yield 6 0 3 2000 2005 2010 2015 2020 Slow then grow Source: Haver Analytics as of November 21, 2023. Indices are unmanaged. An investor cannot invest directly in an index. They are shown for illustrative purposes only and do not represent the performance of any specific investment. Index returns do not include any expenses, fees or sales charges, which would lower performance. Past performance is no guarantee of future results. Real results may vary. year-end 2024. Investors should also understand that the long period of zero interest rates – and even negative yielding bonds – will go down in history as an outlier. We see this much like the mirror opposite period of “great monetary neglect,” which boosted inflation and yields throughout the 1970s. Investment strategy: both income and growth opportunities have been restored The two pillars of investment returns – income and growth – have been reinvigorated. Yields in the US have risen toward two-decade highs ( FIGURE 10 ). With investment grade US corporate bond yields averaging 6% and inflation decelerating, it is quite possible to earn real returns of 4% across a diversified range of fixed income (please see Core portfolios could be ready to shine on page 34 ) . At the same time, tight monetary policy has driven both bond and equity investors to focus predominantly on the largest and safest perceived corporate balance sheets. This has left numerous growth opportunities behind. The seven largest US technology-related shares have driven most of the return in global equities in 2023. We believe this is unlikely to be the case in 2024 and 2025.