Good morning,


We have made reference to the term ‘inflection point’ at several junctures over the last few years, and many market commentators now believe that rates have peaked. Between the Federal Reserve, European Central Bank (ECB), and Bank of England (BoE) there have been 35 interest rate hikes since inflation began to bite post COVID. We will get further guidance from the Fed minutes later this week, but the path of interest rates will continue to be a large market focus. Whilst the efficacy and appropriateness of central bank policy will be the subject of many an economist paper in the years to come, for us the impact on the outlook for multi-asset funds is where our focus lies.


We now have a scenario where sovereign bonds, credit, and cash are all yielding firmly in positive nominal territory, with positive real yields (which take account of inflation) possible in 2024. This creates a much more optimistic backdrop from an asset allocation perspective with viable opportunities for active investment managers. It would be remiss not to acknowledge the ‘price of admission’ to get to this point – namely the poor investment returns of 2022. However, as we start to look towards 2024, the ability to actively manage asset allocations from a position of strength augers well for the period ahead.


As always, if you wish to discuss anything in further detail, please do get in touch.