Wealth Outlook 2024 - Slow then grow

39 Wealth Outlook 2024 | Portfolio views Core portfolios could be ready to shine Using Strategic Return Estimates and asset allocation to build core portfolios At Citi Global Wealth we use these forecasts to build our asset allocation models, along with each asset class risk level, that help form the basis of our clients’ core portfolios. AVS adapts to changing market conditions and recognizes that future returns are strongly affected by current valuations. There are three principles that govern how we build core portfolios today. 1: The importance of asset allocation and embracing a professional approach Following an asset allocation plan is one of the most important decisions you can make as an investor. The core elements of your portfolio should include bonds, equities and (depending on your asset level, risk and liquidity preference) alternatives. Hedge funds add diversification and often experience more contained drawdowns during volatile markets (though certainly come with their own downside risks related to illiquidity and the potential use of leverage). In addition, a mix of private equity and real estate can enhance returns and help further outpace inflation (albeit with potentially even greater liquidity constraints). FIGURE 3 Bonds are back – potential return generation opportunities for 2024 0 Returns 12m after last rate hike Returns 24m after last rate hike Return (%) 25 24 10 5 7 8 5 13 10 14 20 19 15 14 TREASURY BILLS 1°5YR TREASURY 5°10YR TREASURY 10 TREASURY Source: CGW Global Asset Allocation and Quantitative Research, and Bloomberg. Analysis as of October 31, 2023. Rate hike refers to an increase in the Federal Funds rate. Rate hike dates included in this analysis are from February 1995, May 2000, June 2006 and December 2018. The chart on the left shows the averageof the cumulative total unhedged returns for the stated indices over the 12months following the four aforementioned rate hike dates. Treasury bills are represented by the Bloomberg US Treasury Bill Index. 1-5yr treasury is represented by the Bloomberg US Treasury 1-5 years Index. 5-10yr treasury is represented by the Bloomberg US Treasury 5-10 years Index. 10+yr treasury is represented by the Bloomberg US Long Treasury Index. The 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 not necessarily indicative of future returns. Real results may vary.