Sara Devereux, the global head of fixed income at Vanguard's Investment Management Group, predicts a recession in 2024 and discusses how Vanguard is preparing its funds by increasing exposure to safe fixed income assets. Devereux's prediction aligns with the views of other investment strategists, such as Ben Bennett, who also anticipate a recession in the near future. Both Devereux and Bennett point to factors such as low unemployment, a tight labor market, and inflationary pressures as indicators of a potential economic downturn. Devereux highlights the importance of diversification and recommends increasing exposure to safe fixed income assets, such as bonds, in order to mitigate risk during a recession. She emphasizes the need for a cautious approach and suggests that investors consider short-dated bonds and longer-dated interest rates. Devereux also mentions the potential for high-yield and emerging markets to perform well in a soft landing scenario. However, she advises that cash is currently the safest option. Vanguard's approach to preparing its funds for a recession reflects their commitment to managing risk and protecting investor portfolios. [470b2353]
Ariel Bezalel, co-manager of the £2.5bn Jupiter Strategic Bond fund, is also taking a defensive stance with his portfolio in anticipation of a potential recession. Bezalel spoke at the Morningstar Investment Conference and stated that the portfolio is the 'most cautious' it has been for a long time. He is adjusting his portfolio in response to a looming recession in the United States and the fragile global economy. Bezalel is prioritizing income generation over aggressive capital growth, reflecting his cautious approach. [cb8bd7e6]
Kris Atkinson and Shamil Gohil, Portfolio Managers at Fidelity, highlight signs of a global economic slowdown, including rising unemployment across US states and negative economic surprise indices. They note that the Sahm rule has been triggered, indicating a potential recession. Despite recent volatility in risk assets, they argue that markets are fragile. They emphasize the need to de-risk portfolios while maintaining income, focusing on high-quality alpha opportunities and attractive yields in investment-grade credit markets. Their tactical positioning includes a small short in US Treasuries and longs in gilts and bunds, reflecting skepticism about economic resilience. They express concern over the potential for a pause in disinflation and highlight the importance of tight stop-losses in their strategies. [6189f1bc]
Jeffrey Palma, head of multi-asset solutions at Cohen & Steers, shares his investment predictions for the next decade. He expects higher and more normal yields, increased economic volatility, risks of inflationary surprises, greater geopolitical uncertainty, and a resetting of asset prices. Palma believes that fixed income now provides a higher-return alternative to other asset classes, while equity returns are expected to be lower. He sees a favorable environment for real assets, with attractive valuations and the expectation of stickier inflation. Palma also discusses the outlook for fixed income, equity markets, and real assets. [118b85fb]
Mark Spitznagel, founder and CIO of hedge fund Universa Investments, warns of an impending recession in the US economy and the bursting of the biggest market bubble in history. He believes that the negative effects of the Federal Reserve's monetary tightening and high levels of corporate, consumer, and government debt have been postponed. Spitznagel points to signs of a slowing economy, a peaking stock market, and a yield curve disinversion as indicators of an upcoming recession. He predicts that a recession will occur by the end of this year and warns of a stagflationary future after the bubble bursts. However, he also believes that the current bubble still has room to grow before reaching its peak. [c667da08]
Investors should take note of the insights provided by Devereux, Bennett, Bezalel, Atkinson, Gohil, Palma, and Spitznagel, as their expertise in the field of investment management and their analysis of recession indicators and capital market assumptions can help inform investment decisions. It is important for investors to carefully consider their risk tolerance and investment goals when making decisions about asset allocation and portfolio diversification. By staying informed and seeking guidance from trusted financial professionals, investors can navigate the potential challenges and opportunities presented by a recession and the changing capital market landscape. [06e44871]
According to a recent article by Citywire, recessions are often unexpected and can have a significant impact on the economy. Sanlam's Durrell advises investors to be prepared for unexpected downturns by diversifying investments and having a long-term investment strategy. He also recommends staying informed about economic indicators and market trends. Durrell emphasizes the importance of having a financial advisor to navigate through recessions. [8759646a]