Wealth Outlook 2024 - Slow then grow

26 Wealth Outlook 2024 | Our outlook Geopolitics and elections: assessing risk in 2024 — 90% of geopolitical events have not changed the trajectory of the world economy. While some may build physical bunkers, we think that our monetary systemmight survive and “outperform” in a global catastrophe. However, given the difficulty of predicting when an exogenous shock may occur, we suggest building diversified portfolios that can offset the risks of various potential catastrophes. FIG URE 1 shows some key regional economic crisis events of the past and the difference between local and global equity returns, and how, by implication, indices with diversified exposure across global markets would have performed during some of the worst crises of the past 30 years. That is not always the case, of course. A broadly diversified equity index would not have provided much shock absorption during the global financial crisis, the most sweeping economic crisis since the Great Depression. Similarly, the pandemic of 2020 and its aftermath was an unforecastable global event that sawmarkets and economies move in concert, limiting the benefits of diversification for a time. Regional crisis Return during first year of crisis (%) Asian Crisis 1997 Asia -28.3 Global 15.0 LATAM Crisis 1998 LATAM -35.1 Global 22.0 EU Crisis 2011-2013 Europe -10.5 Global -6.9 Collapse 2015 LATAM -30.8 Global -1.8 Average -26.2 7.1 FIGURE 1 Index returns in select periods of regional crisis vs global equity total return Source: Factset as of October 4, 2023. MSCI All CountryWorld Total Return Index is used as proxy for global equities. MSCI Asia Total Return Index is used as proxy for Asian equities. MSCI Europe Total Return Index is used as proxy for European equities. MSCI Latin America Total Return Index is used as proxy for LATAM equities. All forecasts are expressions of opinion and are subject to change without notice and are not intended to be a guarantee of future events. 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.