The abrdn House View^*, updated each quarter, is constructed from the latest opinions of key investment teams and senior economists. While our fund managers continue to exercise investment autonomy, they must justify any deviation from this central view. We recently updated our House View^* to reflect the latest developments in the world. Here’s a roundup of the key points:

• The abrdn House View^* is positive on equities and fixed income, given a better macro-outlook, an expectation that interest rate cuts are coming, and secular support from the tech sector.
• The economic base case is for a US soft landing with slowing but still positive growth. While there are risks, inflation should decline gradually further towards central bank targets.
• This should allow an increasing number of central banks to begin rate cuts this year. Recent central bank communication supports this expectation, and the abrdn House View^* is long duration both in sovereign and corporate space, including emerging market debt.
• The abrdn House View^* is more positive on developed market equities because of the better probability-weighted economic outlook and the view that the performance of the 'Magnificent Seven' stocks is underpinned by fundamentals. But there is an important differentiation among the 'Magnificent Seven' on our analyst recommendation list.
• The negative adjustment in global direct property markets is closer to completion, so the abrdn House View^* has moderated its negative signal and expects to move neutral and even positive in time. The House View^* prefers thematic real estate exposure to living, distribution, healthcare, and technology sectors.
• The abrdn House View^* is neutral in its currency view, with conflicting dollar drivers from near-term US growth exceptionalism and carry, set against an expectation of moderating US growth and a global soft landing.

Many clients have expressed their concerns over the heightened levels of uncertainty this year. While this is completely understandable, I also think investors mustn’t let fear rule their thinking.

In the latest installment of the Investment Outlook, we look at a few sources of uncertainty, and how, where appropriate, they may affect investors.

With the end in sight for central banks’ inflation fight, Paul Diggle asks whether the last mile will prove the most difficult while weighing in on how different economic scenarios may unfold.

On a related note, Adam Skerry and Maximilien Macmillan review how financial markets may react over the ‘last mile’, especially if inflation and interest rates deliver unpleasant surprises.

Andrew Fraser looks at how an obscure monetary policy tool used by the Federal Reserve could affect financial market stability and shape bond markets for years to come.

Finally, smaller company equities have been out of favor with investors for many years. But Tzoulianna Leventi makes a persuasive case for their inclusion in sustainability-aligned Article 9 portfolios.

I hope you enjoy these articles.

^*abrdn, Haver, February 2024. The views expressed should not be construed as advice or an investment recommendation on how to construct a portfolio or whether to buy, retain, or sell a particular investment.

Important information

Projections are offered as opinions and are not reflective of potential performance. Projections are not guaranteed, and actual events or results may differ materially.

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