Flexibility, resilience and opportunity

CONTRIBUTORS

Stephen Dover, CFA

Chief Investment Strategist
Head of Franklin Templeton Institute

Preview

The oak fought the wind and was broken, the willow bent when it must and survived.”
–Robert Jordan

Quality helps weather storms

Trees are an appropriate metaphor for investing. When nurtured, they grow gradually but inexorably. Upon maturity they yield their bounty—shade, nuts and sweet fruit. Yet some trees withstand adversity better than others. Resilience requires flexibility, and in heavy winds, the willow’s ability to bend is superior to the oak’s girth. We expect markets to experience many storms in 2024. Portfolios that bend but don’t break are best suited to provide the resiliency for what lies ahead.

Read the full Institute view.

Navigating the year ahead through multiple lenses

In this publication, Franklin Templeton Institute and our independent investment teams provide a diversity of thinking. This diversity is reflected in wide-ranging views on macro topics such as the growth, inflation and interest-rate outlook, as well as where they believe the best investment opportunities can be found in 2024. Given this, we have summarized the key themes from Franklin Templeton Institute and our independent investment teams to help better understand how they compare to one another. Because we believe an investor’s portfolio should be distributed across the broad range of asset classes and regions in a way that optimizes the balance of risk and reward across various economic outcomes, we hope this provides context as to where our independent managers might fit into a broad allocation.

Our investment teams share their perspectives on the outlook for 2024 through their responses to the following questions:

Do you expect a soft or hard landing in the major economies?
How will the path of interest rates and inflation develop in the major economies?
What catalyst could drive a significant shift in your asset-class focus?
Where do you see the best investment opportunities?
What are the main areas of risk?
What could be a major surprise to markets in 2024?

Read the Global Investment Outlook—Flexibility, resilience and opportunity.

Stephen Dover, CFA
Chief Investment Strategist
Head of Franklin Templeton Institute

Contributors

WHAT ARE THE RISKS?

All investments involve risks, including possible loss of principal.

Fixed income securities involve interest rate, credit, inflation and reinvestment risks, and possible loss of principal. As interest rates rise, the value of fixed income securities falls. Low-rated, high-yield bonds are subject to greater price volatility, illiquidity and possibility of default.

Equity securities are subject to price fluctuation and possible loss of principal. Small- and mid-cap stocks involve greater risks and volatility than large-cap stocks.

Special risks are associated with investing in foreign securities, including risks associated with political and economic developments, trading practices, availability of information, limited markets and currency exchange rate fluctuations and policies; investments in emerging markets involve heightened risks related to the same factors. Sovereign debt securities are subject to various risks in addition to those relating to debt securities and foreign securities generally, including, but not limited to, the risk that a governmental entity may be unwilling or unable to pay interest and repay principal on its sovereign debt. To the extent a strategy focuses on particular countries, regions, industries, sectors or types of investment from time to time, it may be subject to greater risks of adverse developments in such areas of focus than a strategy that invests in a wider variety of countries, regions, industries, sectors or investments. China may be subject to considerable degrees of economic, political and social instability. Investments in securities of Chinese issuers involve risks that are specific to China, including certain legal, regulatory, political and economic risks.

Real estate securities involve special risks, such as declines in the value of real estate and increased susceptibility to adverse economic or regulatory developments affecting the sector.

Investments in alternative strategies, may be exposed to potentially significant fluctuations in value.

This document is intended to be of general interest only. This document should not be construed as individual investment advice or offer or solicitation to buy, sell or hold any shares of fund. The information provided for any individual security mentioned is not a sufficient basis upon which to make an investment decision. Investments involves risks. Value of investments may go up as well as down and past performance is not an indicator or a guarantee of future performance. The investment returns are calculated on NAV to NAV basis, taking into account of reinvestments and capital gain or loss. The investment returns are denominated in stated currency, which may be a foreign currency other than USD and HKD (“other foreign currency”). US/HK dollar-based investors are therefore exposed to fluctuations in the US/HK dollar / other foreign currency exchange rate. Please refer to the offering documents for further details, including the risk factors.

The data, comments, opinions, estimates and other information contained herein may be subject to change without notice. There is no guarantee that an investment product will meet its objective and any forecasts expressed will be realized. Performance may also be affected by currency fluctuations. Reduced liquidity may have a negative impact on the price of the assets. Currency fluctuations may affect the value of overseas investments. Where an investment product invests in emerging markets, the risks can be greater than in developed markets. Where an investment product invests in derivative instruments, this entails specific risks that may increase the risk profile of the investment product. Where an investment product invests in a specific sector or geographical area, the returns may be more volatile than a more diversified investment product. Franklin Templeton accepts no liability whatsoever for any direct or indirect consequential loss arising from use of this document or any comment, opinion or estimate herein. This document may not be reproduced, distributed or published without prior written permission from Franklin Templeton.

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Please contact your financial advisor if you are in doubt of any information contained herein.

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This document is issued by Franklin Templeton Investments (Asia) Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong.

Unless stated otherwise, all information is as of the date stated above. Source: Franklin Templeton.

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