2024 OUTLOOK
An Overview of Our 2024 Views
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United States
Growth Rate
1.2%
Inflation Rate
2.7%
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Expected Rates of Real Economic Growth and Inflation in Key Markets
As of November 30, 2023 • Bloomberg Consensus Estimates for 2024
The Global Economic Backdrop in 2024
Source: Bloomberg L.P.
Our investment views are rooted in our belief that the cyclical backdrop will remain weak in 2024. The consensus expectation is for the global economy to grow 2.7%, which is slightly less than growth is anticipated to be in 2023 and below its post-2000 average of 3.5%. While we believe the global growth rate will be positive, risks are skewed to either matching the consensus expectation or missing it lower. Weakness in global aggregate demand will help those inflation rates that experienced pandemic-related surges continue to decelerate. We expect this will allow most key central banks to modestly cut policy rates before the end of 2024.
Three major drivers inform these views. First, credit growth in key markets is likely to remain subdued, given high interest rates and the increase in bank underwriting standards. Second, consumer spending growth is likely to either slow (United States) or remain slow (euro area and United Kingdom), given the depletion of any excess savings that accrued during the pandemic and weakness in consumer confidence. Third, numerous challenges, such as the war in Ukraine, the Israel-Hamas war, and China’s real estate crisis, will continue to weigh on sentiment and have the unfortunate potential to escalate.
Contributors
Aaron Costello
Regional Head for Asia
Christine Farquhar
Global Co-Head of
Credit Investment Group
Meisan Lim
Managing Director,
Hedge Fund Research
Thomas O'Mahony
Investment Director,
Capital Markets Research
Kevin Rosenbaum
Global Head of
Capital Markets Research
Joseph Tolen
Investment Director,
Credit Investment Group
Stuart Brown
Investment Director,
Capital Markets Research
Celia Dallas
Chief Investment Strategist
Carolina Gómez
Associate Investment Director,
Diverse Manager Research
Stephen Mancini
Senior Investment Director,
Hedge Fund Research
Vijay Padmanabhan
Managing Director,
Credit Investment Group
TJ Scavone
Investment Director,
Capital Markets Research
Marc Cardillo
Global Head of
Real Assets
Sean Duffin
Investment Director,
Capital Markets Research
Simon Hallett
Head of Climate Strategy
Joseph Marenda
Head of Digital Assets Investing
Vish Ramaswami
Managing Director,
Private Equity
Caryn Slotsky
Senior Investment Director,
Private Investment Strategy Research
Eric Costa
Global Head of
Hedge Funds
Frank Fama
Global Co-Head of
Credit Investment Group
Keirsten Lawton
Co-Head of US Private
Equity Research
Wade O'Brien
Managing Director,
Capital Markets Research
Jasmine Richards
Head of
Diverse Manager Research
Chavon Sutton
Senior Investment Director,
Sustainable and Impact Investing
Sustainability & Impact
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Interest Rates
We expect that most major central banks will cut policy rates modestly due to our view that inflation rates will continue to decline. The modest cuts will shift policy rates from restrictive levels closer to neutral levels, which are neither restrictive nor accommodative. Given this view and our view that economic activity will weaken, we see opportunity in US long Treasury securities.
Learn More
Private Equity & Venture Capital
We expect US venture capital down rounds will increase, even as artificial intelligence continues to serve as a major catalyst within the market. We believe flows to European turnaround and value strategies will increase and flows to China private investments will remain muted. We expect secondary transaction volume will increase to a record level.
Learn More
Credit
Learn More
Public Equities
We expect global equity performance will be below its long-term median level, but we believe investors should hold equity allocations in line with policy targets. Within equities, we see opportunities in developed value, developed small caps, and China. We doubt European and emerging markets ex China equities will outperform, and we believe the share of active strategies that outperform will increase.
Learn More
Currencies
Learn More
Real Assets
Learn More
Hedge Funds
We expect equity long/short strategies will outperform their long-term average, due partly to the considerable rise in short rebates. This expectation is also linked to our view that global equity volatility will increase due to our economic expectation and ongoing geopolitical crises.
Learn More
Japan
Growth Rate
1.0%
Inflation Rate
2.2%
United Kingdom
Growth Rate
0.4%
Inflation Rate
3.1%
Eurozone
Growth Rate
0.6%
Inflation Rate
2.7%
China
Growth Rate
4.5%
Inflation Rate
1.7%
As we approach the end of 2023, a number of tough questions confront investors. On the economy, there are overarching concerns, such as will recent interest rate changes lead to weak global growth, have major central banks tamed inflation, and will those same central banks maintain policy rates at current levels? Of course, having views on those questions only yield more questions. At a portfolio level, should investors reduce equity exposure in favor of bonds, will the litany of geopolitical crises that sadly characterize our current world impact markets, or will net zero progress be sustained? And, at the asset class level, what public and private opportunities offer potentially compelling returns? Below, we address these questions and many others, as we share our 2024 Outlook.
2024 Outlook
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Cambridge Associates is a global investment firm with 50 years of institutional investing experience. The firm aims to help pension plans, endowments & foundations, healthcare systems, and private clients implement and manage custom investment portfolios that generate outperformance and maximize their impact on the world. Cambridge Associates delivers a range of services, including outsourced CIO, non-discretionary portfolio management, staff extension and alternative asset class mandates. Contact us today.
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United Kingdom
Growth Rate
0.4%
Inflation Rate
3.1%
Eurozone
Growth Rate
0.6%
Inflation Rate
2.7%
China
Growth Rate
4.5%
Inflation Rate
1.7%
Japan
Growth Rate
1.0%
Inflation Rate
2.2%
An Overview of Our 2024 Views
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Sustainability & Impact
We expect more companies will set science-based targets to reduce their emissions and develop credible transition plans to meet their targets. We believe funds raised by natural capital strategies will hit a new record and that California carbon allowances will outperform global equities.
Learn More
Public Equities
We expect global equity performance will be below its long-term median level, but we believe investors should hold equity allocations in line with policy targets. Within equities, we see opportunities in developed value, developed small caps, and China. We doubt European and emerging markets ex China equities will outperform, and we believe the share of active strategies that outperform will increase.
Learn More
Interest Rates
We expect that most major central banks will cut policy rates modestly due to our view that inflation rates will continue to decline. The modest cuts will shift policy rates from restrictive levels closer to neutral levels, which are neither restrictive nor accommodative. Given this view and our view that economic activity will weaken, we see opportunity in US long Treasury securities.
Learn More
Real Assets
We expect REIT and public infrastructure performances will improve, given undemanding valuations and our view on interest rates. We believe private infrastructure funds will perform well, and we think nuclear energy will emerge as a small but important opportunity.
Learn More
Hedge Funds
We expect equity long/short strategies will outperform their long-term average, due partly to the considerable rise in short rebates. This expectation is also linked to our view that global equity volatility will increase due to our economic expectation and ongoing geopolitical crises.
Learn More
Private Equity & Venture Capital
We expect US venture capital down rounds will increase, even as artificial intelligence continues to serve as a major catalyst within the market. We believe flows to European turnaround and value strategies will increase and flows to China private investments will remain muted. We expect secondary transaction volume will increase to a record level.
Learn More
Credit
We expect direct lending and European opportunistic private credit funds will outperform their long-term averages because of high asset yields and the pull back in credit availability among traditional lenders. We like structured credits, particularly high-quality collateralized loan obligation debt, and we expect high-yield bonds will outperform leveraged loans. But we remain neutral on high yield because spreads are compressed.
Learn More
Currencies
We expect the US dollar and gold will more or less hold their values, given our economic expectation and the many geopolitical risks. We believe the yen will appreciate, and we expect the thawing crypto winter will fully transition to a spring.
Michael Brand
Managing Director,
Real Assets
Michael Broucek
Investment Director,
Public Equities
Stuart Brown
Investment Director,
Capital Markets Research
Marc Cardillo
Head of Global
Real Assets
Aaron Costello
Regional Head for Asia
Celia Dallas
Chief Investment Strategist
Sehr Dsani
Investment Director,
Capital Markets Research
Sean Duffin
Senior Investment Director, Capital Markets Research
Frank Fama
Co-Head of Global Credit Investment Group
Vivian Gan
Associate Investment Director, Capital Markets Research
JP Gibbons
Senior Investment Director, Sustainable & Impact Investing
Theresa Hajer
Head of US Venture Capital
Simon Hallett
Head of Climate Strategy
Petros Krappas
Senior Investment Director,
Private Equity
Liqian Ma
Head of Sustainable and
Impact Investing Research
Joe Marenda
Head of Hedge Fund Research and Digital Assets Investing
Wade O'Brien
Managing Director,
Capital Markets Research
Thomas O'Mahony
Senior Investment Director,
Capital Markets Research
Vijay Padmanabhan
Managing Director,
Credit Investments
Kevin Rosenbaum
Head of Global
Capital Markets Research
TJ Scavone
Investment Director,
Capital Markets Research
Nicolas Schellenberg
Managing Director,
Private Equity
Eric Thielscher
Head of Global Public Equities
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Learn More
Public Equities
We expect global equity performance will be below its long-term median level, but we believe investors should hold equity allocations in line with policy targets. Within equities, we see opportunities in developed value, developed small caps, and China. We doubt European and emerging markets ex China equities will outperform, and we believe the share of active strategies that outperform will increase.
Learn More
Public Equities
We expect global equity performance will be below its long-term median level, but we believe investors should hold equity allocations in line with policy targets. Within equities, we see opportunities in developed value, developed small caps, and China. We doubt European and emerging markets ex China equities will outperform, and we believe the share of active strategies that outperform will increase.
Learn More
Public Equities
We expect global equity performance will be below its long-term median level, but we believe investors should hold equity allocations in line with policy targets. Within equities, we see opportunities in developed value, developed small caps, and China. We doubt European and emerging markets ex China equities will outperform, and we believe the share of active strategies that outperform will increase.
Learn More
Public Equities
We expect global equity performance will be below its long-term median level, but we believe investors should hold equity allocations in line with policy targets. Within equities, we see opportunities in developed value, developed small caps, and China. We doubt European and emerging markets ex China equities will outperform, and we believe the share of active strategies that outperform will increase.
Learn More
Public Equities
We expect global equity performance will be below its long-term median level, but we believe investors should hold equity allocations in line with policy targets. Within equities, we see opportunities in developed value, developed small caps, and China. We doubt European and emerging markets ex China equities will outperform, and we believe the share of active strategies that outperform will increase.
Learn More
Public Equities
We expect global equity performance will be below its long-term median level, but we believe investors should hold equity allocations in line with policy targets. Within equities, we see opportunities in developed value, developed small caps, and China. We doubt European and emerging markets ex China equities will outperform, and we believe the share of active strategies that outperform will increase.
Learn More
Public Equities
We expect global equity performance will be below its long-term median level, but we believe investors should hold equity allocations in line with policy targets. Within equities, we see opportunities in developed value, developed small caps, and China. We doubt European and emerging markets ex China equities will outperform, and we believe the share of active strategies that outperform will increase.
Learn More
Public Equities
We expect global equity performance will be below its long-term median level, but we believe investors should hold equity allocations in line with policy targets. Within equities, we see opportunities in developed value, developed small caps, and China. We doubt European and emerging markets ex China equities will outperform, and we believe the share of active strategies that outperform will increase.
Learn More
Public Equities
We expect global equity performance will be below its long-term median level, but we believe investors should hold equity allocations in line with policy targets. Within equities, we see opportunities in developed value, developed small caps, and China. We doubt European and emerging markets ex China equities will outperform, and we believe the share of active strategies that outperform will increase.
Learn More
Public Equities
We expect global equity performance will be below its long-term median level, but we believe investors should hold equity allocations in line with policy targets. Within equities, we see opportunities in developed value, developed small caps, and China. We doubt European and emerging markets ex China equities will outperform, and we believe the share of active strategies that outperform will increase.
Learn More
Public Equities
We expect global equity performance will be below its long-term median level, but we believe investors should hold equity allocations in line with policy targets. Within equities, we see opportunities in developed value, developed small caps, and China. We doubt European and emerging markets ex China equities will outperform, and we believe the share of active strategies that outperform will increase.
Learn More
Public Equities
We expect global equity performance will be below its long-term median level, but we believe investors should hold equity allocations in line with policy targets. Within equities, we see opportunities in developed value, developed small caps, and China. We doubt European and emerging markets ex China equities will outperform, and we believe the share of active strategies that outperform will increase.
We expect direct lending and European opportunistic private credit funds will outperform their long-term averages because of high asset yields and the pull back in credit availability among traditional lenders. We like structured credits, particularly high-quality collateralized loan obligation debt, and we expect high-yield bonds will outperform leveraged loans. But we remain neutral on high yield because spreads are compressed.
We expect REIT and public infrastructure performances will improve, given undemanding valuations and our view on interest rates. We believe private infrastructure funds will perform well, and we think nuclear energy will emerge as a small but important opportunity.
We expect the US dollar and gold will more or less hold their values, given our economic expectation and the many geopolitical risks. We believe the yen will appreciate, and we expect the thawing crypto winter will fully transition to a spring.
We expect more companies will set science-based targets to reduce their emissions and develop credible transition plans to meet their targets. We believe funds raised by natural capital strategies will hit a new record and that California carbon allowances will outperform global equities.
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