Global Asset Allocation Viewpoints

Gentle slope, not cliff edge

1Q 2024

For public distribution in the United States. For institutional, professional, qualified and/or wholesale investor use only in other permitted jurisdictions as defined by local laws and regulations.

Key themes

Hover over each tile to read more about the quarter's key themes.

featured theme

Macro

Key takeaway

The global economy is cooling now as monetary tightening gradually takes its toll. This will drain out the most stubborn of price pressures, opening the door to global policy easing.

Global economic growth comes off the boil

Investors were almost universally surprised by global growth last year —by the extent of U.S. resilience, the depth of China weakness, and the extent of global disinflation. Economic growth is now cooling in most parts of the world as monetary tightening gradually takes its toll, although timely data suggest a rolling U.S. weakness as opposed to other regions experiencing more pronounced setbacks. Indeed, strong support from consumer spending and the labor market has significantly reduced the risk of recession, although rising credit card delinquencies and reduced job postings suggest headwinds are building. Europe remains a weak link, with soft economic data suggesting that it is flirting with stagnation. In China, policy stimulus is likely insufficient to drive a significant economic recovery in 2024. There will be strong contributions from other economies such as India and Japan. Yet, slowing growth in the U.S, China and Europe implies a slowdown in overall global economic momentum. While it’s likely to be more of a gentle downward slope, it does render the global economy vulnerable to additional shocks. The good news is that the slowing growth environment should drain out the most stubborn of inflationary pressures, opening the door to gradual global policy easing in mid-2024.

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May 2008–November 2023

70 65 60 55 50 45 40 35 30

Source: Bloomberg, Principal Asset Management. Data as of November 30, 2023.

featured theme

Equities

Key takeaway

Rich U.S. equity valuations will be challenged by economic headwinds in H1, but a Fed pivot and the ensuing economic recovery should support equities in H2.

A year of two halves

Rich equity valuations, a soft economic landing and a Fed pivot suggest that 2024 will likely be a year of two halves. Plunging bond yields in 4Q permitted U.S. equities to regain their previous record highs. Yet, lower yields can support equities on a sustained basis only if earnings remain healthy. In H1, elevated earnings growth expectations will likely be tested by slowing consumer demand as excess savings erode, the labor market softens, and delinquencies rise. Margins will also be under pressure given less opportunity for price padding in the lower inflation environment. These headwinds may challenge the strong equity narrative in H1. However, equities should see renewed resurgence in H2. Not only will a recovering U.S. economy imply support for earnings growth, but contained price pressures mean that the Fed can likely begin monetary easing. Historically, U.S. equity returns during Fed easing cycles are not resoundingly positive. Yet, during the few easing cycles where recession has been avoided and, as a result, earnings growth has only weakened slightly, equity markets have reacted positively. While the first half of 2024 may prove choppy, investors with longer term horizons should identify good value opportunities and position for an equity market rally in H2.

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featured theme

Fixed income

Key takeaway

Global bonds rallied in 4Q on Federal Reserve and European Central Bank pivot hopes and a less aggressive Bank of Japan. Yet with credit spreads historically tight, an economic slowdown in 2024 will challenge valuations.

Tight credit spreads will be challenged

The U.S. fixed income market experienced a very volatile 2023. The U.S. Agg struggled for much of the year before a sharp rebound in 4Q delivered a strong quarterly return and, ultimately, the first positive annual return since 2020. U.S. Treasurys were the top performer in 4Q, benefiting significantly from aggressive Fed cut expectations and reduced term premia. Within the credit space, longer duration assets, such as investment grade, outperformed shorter duration assets such as high yield and leveraged loans despite greater spread tightening in the low-quality space. Global fixed income followed the U.S. Agg higher as the ECB also shifted to a more dovish tone and the BOJ pursued policy normalization less aggressively than expected. The weaker U.S. dollar provided an additional boost to unhedged global bonds. Looking to 2024, Treasury yields may have some near-term upside pressure if aggressive rate cut expectations fail to materialize, although slowing growth and inflation suggest rates are very unlikely to rise significantly from current levels. Credit faces some headwinds given spreads are at their tightest levels since early 2022, pricing in a goldilocks scenario of a soft economic landing and a dovish Fed. The unfolding economic slowdown through 2024 will likely challenge these valuations.

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Source: Bloomberg, Principal Asset Management. U.S. Agg = Bloomberg U.S. Aggregate Bond Index; U.S. Treasury = Bloomberg U.S. Treasury Index; Corporates = Bloomberg U.S. Corporate Index; High yield = Bloomberg U.S. Corporate High Yield Index. Data as of December 31, 2023.

featured theme

Alternatives

Key takeaway

REITs have been challenged over the past two years and are now deeply discounted. With real yields having peaked, we shift to an overweight.

REITs: Attractive valuations and fundamentals collide

After facing significant headwinds for the past two years, REITs are once again a compelling investment proposition. Historically, the peak in long-term real yields is the catalyst for REITs market outperformance and this cycle is proving no different, with the significant bond market rally in 4Q opening the door for meaningful gains for global REITs. These gains should extend into 2024. Notably, the valuations of public REITs have corrected sharply since the Fed rate hike cycle started, and look attractive compared to broader equity markets. Fundamentals are also looking more constructive. When macro conditions become more challenging, REITS are often beneficiaries of investor rotation into risk assets that feature long-duration, quality, and durable cash flows. With the global economy likely to slow somewhat in 2024, these defensive characteristics should drive strong REITs performance. Office REITs remain the weak spot. Yet, investors should note that traditional office space accounts for only 3% of the overall U.S. REIT market and 6% of the global market. As such, office exposure itself should not deter investors.

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8.5%

total yields

at end of 2Q

While higher quality bonds will likely outperform and provide important diversification benefits, the mild recovery implies high yield (HY) defaults may not spike significantly, and elevated HY yields could provide decent cushion as spreads widen.

featured theme

Investment implications

Diversified asset allocation: Sticking to neutral but with shifts below the surface

Investment preference, 1Q 2024

Less

Neutral

Fixed income

Alternatives

Equities

Our equities positioning remains at neutral. Rich equity valuations are likely to be challenged in early 2024 as elevated earnings growth expectations are tested by slowing consumer demand and margin pressure. However, in acknowledgement of the improved U.S. outlook and strong potential for rate cuts, we shift U.S. equities to overweight. Within U.S. equities, attractive small-cap valuations and potential for improving growth in 2Q prompt an upgrade to neutral. Our exposure to ex-U.S. developed markets remains at an underweight, weighed down by worries about European growth as well as concerns that a rapidly appreciating yen could hurt earnings and trigger profit taking. We move our EM position to neutral, concerned about China’s outlook, but also with tilts towards Latin America as both valuations and fundamentals are attractive.

how to implement

• Large-cap U.S. strategies • Quality-biased active managers • Well-diversified and active international managers • Active mid- and small-cap strategies

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Current quarter (1Q)

Last quarter (4Q)

Less

Neutral

Large-cap

Mid-cap

Small-cap

Ex-U.S.

Europe

U.K.

Japan

Developed Asia Pacific ex-Japan

Emerging markets

key

Viewpoints reflect a 12-month horizon

indicates a change in preference from the previous quarter (light blue) to the current quarter (dark blue).

Index descriptions

Important information

MSCI Brazil Index is designed to measure the performance of the large and mid cap segments of the Brazilian market. MSCI China Index captures large and mid cap representation across China A shares, H shares, B shares, Red chips, P chips and foreign listings (e.g. ADRs). MSCI EAFE Index is listed for foreign stock funds (EAFE refers to Europe, Australasia, and Far East). Widely accepted as a benchmark for international stock performance, the EAFE Index is an aggregate of 21 individual country indexes. MSCI Emerging Markets Index consists of large and mid cap companies across 24 countries and represents 10% of the world market capitalization. The index covers approximately 85% of the free float-adjusted market capitalization in each country in each of the 24 countries. MSCI Europe Index captures large and mid cap representation across 15 Developed Markets (DM) countries in Europe. MSCI Europe Banks Index is composed of large and mid cap stocks across 15 Developed Markets countries in Europe. All securities in the index are classified in the Banks industry group (within the Financials sector) according to the Global Industry Classification Standard (GICS®). MSCI Germany Index is designed to measure the performance of the large and mid cap segments of the German market. MSCI India Index is designed to measure the performance of the large and mid cap segments of the Indian market. MSCI Japan Index is designed to measure the performance of the large and mid cap segments of the Japanese market. MSCI United Kingdom Index is designed to measure the performance of the large and mid cap segments of the UK market. MSCI USA Growth Index captures large and mid cap securities exhibiting overall growth style characteristics in the U.S. The growth investment style characteristics for index construction are defined using five variables: long-term forward EPS growth rate, short-term forward EPS growth rate, current internal growth rate and long-term historical EPS growth trend and long-term historical sales per share growth trend. MSCI USA Index is a market capitalization weighted index designed to measure the performance of equity securities in the top 85% by market capitalization of equity securities listed on stock exchanges in the United States. MSCI USA Large Cap Index is designed to measure the performance of the large cap segments of the U.S. market. MSCI USA Mid Cap Index is designed to measure the performance of the mid cap segments of the U.S. market. MSCI USA Quality Index aims to capture the performance of quality growth stocks by identifying stocks with high quality scores based on three main fundamental variables: high return on equity (ROE), stable year-over-year earnings growth and low financial leverage. The MSCI Quality Indexes complement existing MSCI Factor Indexes and can provide an effective diversification role in a portfolio of factor strategies. MSCI USA Small Cap Index is designed to measure the performance of the small cap segment of the U.S. equity market. MSCI USA Value Index captures large and mid cap U.S. securities exhibiting overall value style characteristics. The value investment style characteristics for index construction are defined using three variables: book value to price, 12-month forward earnings to price and dividend yield. Russell 2000 Index is a small-cap U.S. stock market index that makes up the smallest 2,000 stocks in the Russell 3000 Index. Standard & Poor's 500 Index is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. U.S. dollar index (USDX) is a measure of the value of the U.S. dollar relative to a basket of foreign currencies. Market indices have been provided for comparison purposes only. They are unmanaged and do not reflect any fees or expenses. Individuals cannot invest directly in an index.

Bloomberg Commodity Total Return index is composed of futures contracts and reflects the returns on a fully collateralized investment in the BCOM. This combines the returns of the BCOM with the returns on cash collateral invested in 13 week (3 Month) U.S. Treasury Bills Bloomberg Global Aggregate Bond Index comprises global investment grade debt including treasuries, government-related, corporate, and securitized fixed-rate bonds from developed and emerging market issuers. There are four regional aggregate benchmarks that largely comprise the Global Aggregate Index: the US Aggregate, the Pan-European Aggregate, the Asian-Pacific Aggregate, and the Canadian Aggregate Indices. The Index also includes Eurodollar, Euro-Yen, and 144A Index-eligible securities and debt from other local currency markets not tracked by regional aggregate benchmarks Bloomberg U.S. Agency Bond Index is composed of agency securities that are publicly issued by U.S. government agencies, and corporate and non-U.S. debt guaranteed by the U.S. government. Bloomberg U.S. Aggregate Bond Index is the most widely followed broad market U.S. bond index. It measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. Bloomberg U.S. High-Yield Corporate Bond Index is a rules-based, market-value-weighted index engineered to measure publicly issued non-investment grade USD fixed-rate, taxable and corporate bonds. Bloomberg U.S. Corp High Yield 2% Issuer Capped Index is an unmanaged index comprised of fixed rate, non-investment grade debt securities that are dollar denominated. The index limits the maximum exposure to any one issuer to 2%. Bloomberg U.S. Corporate Investment Grade Index includes publicly issued U.S. corporate and specified foreign debentures and secured notes that meet the specified maturity, liquidity and quality requirements. To qualify, bonds must be SEC-registered. The corporate sectors are industrial, utility and finance, which include both U.S. and non-U.S. corporations. Bloomberg U.S. Treasury Index measures U.S. dollar-denominated, fixed-rate, nominal debt issued by the U.S. Treasury. Treasury bills are excluded by the maturity constraint. STRIPS are excluded from the index because their inclusion would result in double-counting. FTSE Global Core Infrastructure 50/50 Total Return Index comprises securities in developed countries which provide exposure to core infrastructure businesses, namely transportation, energy and telecommunications, as defined by FTSE's International Benchmark Classification. The FTSE Nareit All Equity REITs Index is a free-float adjusted, market capitalization-weighted index of U.S. equity REITs. HFRI 500 Fund Weighted Composite Index is a global, equal-weighted index of the largest hedge funds that report to the HFR Database which are open to new investments and offer quarterly liquidity or better. ICE BofA Emerging Markets Corporate Plus Index, which tracks the performance of US dollar (USD) and Euro denominated emerging markets non-sovereign debt publicly issued within the major domestic and Eurobond markets. ICE BofA MOVE index, or Merrill Lynch Option Volatility Estimate Index, is a crucial gauge of interest rate volatility in the U.S. Treasury market. ICE BofA U.S. High Yield Index tracks the performance of US dollar denominated below investment grade rated corporate debt publicly issued in the US domestic market. ICE BofA U.S. Investment Grade Institutional Capital Securities Index tracks the performance of US dollar denominated investment grade hybrid capital corporate and preferred securities publicly issued in the US domestic market. ICE BofA U.S. Corporate Index consists of investment-grade corporate bonds that have a remaining maturity of greater than or equal to one year and have $250 million or more of outstanding face value. J.P. Morgan Emerging Markets Bond Index Global Core tracks liquid, U.S. dollar emerging market fixed and floating-rate debt instruments issued by sovereign and quasi sovereign entities. ISM manufacturing index is a leading economic indicator that measures the growth in the manufacturing sector in the United States. MSCI ACWI Index includes large and mid cap stocks across developed and emerging market countries. MSCI ACWI Utilities Index captures large and mid cap representation across 23 Developed Markets (DM) and 24 Emerging Markets (EM) countries*. All securities in the index are classified in the Utilities sector as per the Global Industry Classification Standard (GICS®). Market indices have been provided for comparison purposes only. They are unmanaged and do not reflect any fees or expenses. Individuals cannot invest directly in an index

Index descriptions

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Risk considerations Investing involves risk, including possible loss of principal. Past performance is no guarantee of future results. Asset allocation and diversification do not ensure a profit or protect against a loss. Equity investments involve greater risk, including higher volatility, than fixed-income investments. Fixed-income investments are subject to interest rate risk; as interest rates rise their value will decline. International and global investing involves greater risks such as currency fluctuations, political/social instability and differing accounting standards. Potential investors should be aware of the risks inherent to owning and investing in real estate, including value fluctuations, capital market pricing volatility, liquidity risks, leverage, credit risk, occupancy risk and legal risk. Non-investment grade securities offer a potentially higher yield but carry a greater degree of risk. Risks of preferred securities differ from risks inherent in other investments. In particular, in a bankruptcy preferred securities are senior to common stock but subordinate to other corporate debt. Emerging market debt may be subject to heightened default and liquidity risk. Risk is magnified in emerging markets, which may lack established legal, political, business, or social structures to support securities markets. Small and mid-cap stocks may have additional risks including greater price volatility. Treasury inflation-protected securities (TIPS) are a type of Treasury security issued by the U.S. government. TIPS are indexed to inflation in order to help investors from a decline in the purchasing power of their money. As inflation rises, rather than their yield increasing, TIPS instead adjust in price (principal amount) in order to maintain their real value. Inflation and other economic cycles and conditions are difficult to predict and there Is no guarantee that any inflation mitigation/protection strategy will be successful. Contingent Capitals Securities may have substantially greater risk than other securities in times of financial stress. An issuer or regulator’s decision to write down, write off or convert a CoCo may result in complete loss on an investment. Real assets include but not limited to precious metals, commodities, real estate, land, equipment, infrastructure, and natural resources. Each real asset is subject to its own unique investment risk and should be independently evaluated before investing. As an asset class, real assets are less developed, more illiquid, and less transparent compared to traditional asset classes. Important Information This material covers general information only and does not take account of any investor’s investment objectives or financial situation and should not be construed as specific investment advice, a recommendation, or be relied on in any way as a guarantee, promise, forecast or prediction of future events regarding an investment or the markets in general. The opinions and predictions expressed are subject to change without prior notice. The information presented has been derived from sources believed to be accurate; however, we do not independently verify or guarantee its accuracy or validity. Any reference to a specific investment or security does not constitute a recommendation to buy, sell, or hold such investment or security, nor an indication that the investment manager or its affiliates has recommended a specific security for any client account. Subject to any contrary provisions of applicable law, the investment manager and its affiliates, and their officers, directors, employees, agents, disclaim any express or implied warranty of reliability or accuracy and any responsibility arising in any way (including by reason of negligence) for errors or omissions in the information or data provided. This material may contain ‘forward-looking’ information that is not purely historical in nature and may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. This material is not intended for distribution to or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation.

Important information

Disclosures

Investment implications

Alternatives

Fixed income

Equities

Macro

Global Asset Allocation Viewpoints

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Download the GAAV (PDF)

Equities will likely see volatility in H1 followed by a rally in H2 as policy easing arrives.

Falling bond yields have driven a sharp market rally, but this can only be sustained if earnings deliver. An economic slowdown in H1, coupled with slightly later than expected rate cuts, suggest some volatility.

Global growth is coming off the boil.

Economic growth is now cooling as global monetary tightening gradually takes its toll. U.S. recession risk has diminished, although consumer headwinds are rising. China and Europe are likely to see another year of tepid growth.

Fixed income credit spreads are very tight going into an economic slowdown.

Rate cuts failing to materialize may drive extended U.S. Treasury disappointment in 1Q. Higher-quality credit should perform better than lower-quality credit as the economy slows, and as the maturity wall becomes more pressing.

Alternatives provide important diversification against traditional equities and fixed income.

Commodities are facing an unclear near-term future as investors weigh up geopolitical risks versus greater U.S. oil supply. With real bond yields likely having peaked, REITs are facing a much brighter outlook.

Fixed income

Alternatives

Fixed income

Our fixed income positioning also remains at neutral. After a strong 4Q, Treasury yields are likely to remain volatile in 1Q and may even see some upward pressure if rate cut expectations prove optimistic. Within credit, we keep our core bonds position at a slight overweight. Investment grade spreads are narrow, but they are supported by resilient economic growth and subdued default risk. High yield remains at neutral but could be pressured by rising default risks. Local currency emerging market debt remains at an overweight as central bank rate cuts should enhance returns—but we acknowledge that the U.S. dollar is unlikely to provide much of a tailwind, while a deeper than expected U.S. downturn would hurt the outlook.

how to implement

• IG credit heavy core fixed income • Agency MBS strategies • Flexible emerging market debt strategies • Active high yield strategies

Current quarter (1Q)

Last quarter (4Q)

Alternatives

Alternatives remain at a neutral weighting. Commodities and natural resources remain at neutral given the contrasting impacts from geopolitical risk and increased U.S. oil supply. Infrastructure remains at neutral given the more resilient economic backdrop and continued disinflation trend, while it should benefit from its equity beta. REITs valuations have improved significantly and, with real yields having peaked, there is a strong case for a REITs overweight. Hedge funds shift to overweight, as higher correlations coupled with expected high volatility presents a favorable environment for hedge fund strategies.

how to implement

• Diversified real asset strategies (infrastructure, natural resources)

Current quarter (1Q)

Last quarter (4Q)

Less

Neutral

Equities

Key themes

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Coming Soon

01

Equities will likely see volatility in H1 followed by a rally in H2 as policy easing arrives.

02 Fixed income credit spreads are very tight going into an economic slowdown.

03 Alternatives provide important diversification against traditional equities and fixed income.

04

how to implement

• IG credit heavy core fixed income for stability • Agency MBS strategies • Active emerging market debt

Contact your rep

Current Quarter (1Q)

Last Quarter (4Q)

Equities

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Neutral

how to implement

• Diversified real asset strategies (Infrastructure, natural resources) • Private real estate markets

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Current Quarter (1Q)

Last Quarter (4Q)

Commodities

Natural resources

Infrastructure

REITs

Hedge Funds

Developed market and China Purchasing Managers’ Index (PMI)

Fixed income asset class performance

Total return, rebased to 100 at January 1, 2023

Treasurys

Mortgages

Investment grade corporates

High yield/Senior loans

Preferreds (debt & equity)

TIPS

Ex-U.S.

Developed market sovereigns

Developed market credit

Emerging market local currency

Emerging market hard currency

Natural resources

Infrastructure

REITs

Hedge funds

Less

Neutral

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Investment Preference, 3Q 2023

S&P 500 performance during Fed easing cycles where recession was avoided

Performance after preemptive Fed cuts with no recessions amidst moderate inflation environment

Note: Pre-emptive and successful Fed cuts in moderate inflation includes periods when Fed cut and there was no recession, it also includes periods when recessions occurred due to unforeseeable incidents (COVID, spiking oil price etc.). Source: Bloomberg, Principal Asset Management. Data as of December 31, 2023.

Public REIT performance during various rate environments

Cumulative return

Source: FactSet, Principal Real Estate. Returns data is showing FTSE EPRA/NAREIT Developed index (global REITs) average cumulative total returns and excess returns over the MSCI World (global equities) and FTSE NAREIT Equity REITs (U.S. REITs) over the S&P 500 (U.S. equities) during the last 7 periods of rising real yields (an increase of at least 75 bps represented by the U.S. 10-year TIPS) and during the 12 months after the peak of the rising rate period. Past performance does not guarantee future results. Indices are unmanaged and do not take into account fees, expenses, and transaction costs and it is not possible to invest in an index. Data as of December 31, 2023.

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

16% 14% 12% 10% 8% 6% 4% 2% 0%

0 = Month of rate action

U.S. composite PMI

Europe composite PMI

China composite PMI

S&P 500 Trend

S&P 500 LTM EPS Trend

Tech bubble peak: 1,527 EPS $53

Housing bubble peak: 1,565 EPS $93

Sept. 30, 2023: 4,288 EPS $217

Hover over key to isolate

116 112 108 104 100 96

Jan 2023 Feb 2023 Mar 2023 Apr 2023 May 2023 Jun 2023 Jul 2023 Aug 2023 Sep 2023 Oct 2023 Nov 2023 Dec 2023

U.S. Agg

U.S. Treasurys

High yield

Global REITs

U.S. REITs

25% 20% 15% 10% 5% 0% -5% -10% -15% -20%

Returns when rates are rising

Returns vs equities during rising rates

Average 12m returns after peak rates

Average 12m returns vs equities after peak rates

-1.1%

-2.9%

-12.5%

-15.7%

20.1%

18.3%

8.3%

6.9%

May 2008–November 2023

70 65 60 55 50 45 40 35 30

5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500

1995 2000 2005 2010 2015 2020

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

8% 7% 6% 5% 4% 3% 2% 1% 0%

25% 20% 15% 10% 5% 0% -5% -10% -15% -20%

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For more equities insights, access our Viewpoints.

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For more alternatives insights, access our Viewpoints.

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For more macro insights, access our Viewpoints.

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Less

Neutral

Treasurys

Mortgages

Investment grade corporates

Preferreds (debt & equity)

TIPS

Developed market sovereigns

Developed market credit

Emerging market local currency

High yield/Senior loans

Ex-U.S.

Emerging market hard currency

Viewpoints reflect a 12-month horizon

indicates a change in preference from the previous quarter (light blue) to the current quarter (dark blue).

Source: Principal Asset Allocation. Alternatives asset class include commodities, natural resources, infrastructure, REITs, and hedge funds. Allocations across the investment outlook can be proportionately adjusted so magnitudes across categories do not have to net to neutral. Data as of December 31, 2023.

• Private real estate markets

CIO, Asset Allocation

Todd Jablonski, CFA

Director, Global Insights & Content Strategy

Brian Skocypec, CIMA

Chief Global Strategist

Seema Shah

Director, Quantitative Strategist

Han Peng, CFA

Insights Strategist

Ben Brandsgard

Principal Global Insights Team

Insights team

What should investors expect from markets and the economy in the first quarter and beyond? Listen as Seema Shah, Chief Global Strategist and Marc Dummer, Client Portfolio Manager, Asset Allocation share their perspectives including key investment themes and asset allocation preferences.

1Q GAAV video presentation

What should investors expect from markets and the economy in the first quarter and beyond? Listen as Seema Shah, Chief Global Strategist and Marc Dummer, Client Portfolio Manager, Asset Allocation share their perspectives including key investment themes and asset allocation preferences.

Recorded April 18, 2023

1Q GAAV video presentation

Corporates

0 1 2 3 4 5 6

S&P 500 PE LTM Trend

0 = Month of rate action

0 1 2 3 4 5 6

16% 14% 12% 10% 8% 6% 4% 2% 0%

S&P 500 PE LTM Trend

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23

Corporates

116 112 108 104 100 96

Jan 2023 Feb 2023 Mar 2023 Apr 2023 May 2023 Jun 2023 Jul 2023 Aug 2023 Sep 2023 Oct 2023 Nov 2023 Dec 2023