Wealth Outlook 2024 - Slow then grow

61 Wealth Outlook 2024 | Opportunistic Our top 10 high conviction potential opportunities FIGURE 7 … and in producers’ high free cash flow yield S&P 500 energy FCF yield (%) WTI crude price ($/barrel) 110 80 50 20 15 10 5 0 2020 2018 2016 2022 2024 Source: Bloomberg andHaver Analytics as of November 22, 2023. All forecasts are expressions of opinion and are subject to changewithout 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. prices also enhance the value of its competition from green alternatives. A transition away from fossil fuels requires redundant energy supplies to avoid economic disruption. Geopolitical considerations also argue for redundancy. The relatively low valuation of most oil and gas producers, pipelines and equipment makers make themworthy portfolio components to consider. Their equities and bonds have reclaimed their traditional role as a potential source of income while also seeking a direct if partial hedge against shocks and inflation ( FIGURE 7 ). 4. Copper miner equities/clean energy infrastructure The transition to clean energy involves extensive investment and experimentation with new technologies. Some will prove uneconomic, while others will shape the grid of the future. The prospect of large capital outlays without immediate profit drove shares of clean energy producers lower during most of the past two years as US Federal Reserve (Fed) tightening rationed credit for unprofitable firms. China has supplied much of the world with solar panels at price levels that are ruinous for global competitors but still helpful for reducing global emissions. In other areas like hydrogen, potential producers and users are waiting for breakthroughs in technologies that are yet unproven. Green tech – and related areas such as clean water infrastructure – involves a range of investments with differing risk/reward characteristics. One component