Atchison Principal, Jake Jodlowski highlighted that, “We foresee a stable growth trajectory, particularly in developed markets, offering a reliable backdrop for our strategic asset allocation positioning.”

A central theme of the TAA outlook is the anticipated actions of major central banks, particularly the U.S Federal Reserve, with markets now pricing in two rate cuts by January 2025.

This outlook is supported by signs of easing inflation. Jodlowski added, “the gradual reduction in rates, as inflationary pressures diminish, supports a positive stance on risk assets, particularly equities, this comes despite concerns around the valuation of some pockets of the market.”

He further noted that, despite significant political events, including the U.S Presidential election, market fundamentals remain strong, allowing for a long-term investment focus. “While elections can cause short-term volatility, the market’s underlying strength offers resilience.”

Atchison advocates a pro-risk approach, with a notable overweight in international equities and credit. The asset consultancy favours mid-cap equities in Australia and sees an attractive valuation differentiated in emerging markets.

“Our confidence in international equities, especially outside China, is underpinned by solid economic fundamentals and supportive valuations.”

The outlook also includes a neutral stance on duration and an underweight position in cash, anticipating stable bond yields and potential rate cuts.

“We see limited value in holding cash for investors and prefer to explore higher-yielding credit opportunities.”

The TAA Outlook urges caution regarding real assets particularly some parts of the commercial property sector, recommending targeted investments in essential infrastructure and gold to hedge against potential market volatility.

Infrastructure investments and gold offer protection against inflation and market fluctuations, providing a safe haven amidst economic uncertainties.

“Persistent inflation could compel central banks to maintain a tighter stance, potentially challenging risk assets. We caution against complacency, advising vigilance in risk management.

“Current low volatility should not lull investors into a false sense of security. A diversified and balanced portfolio remains essential, and the role of relevancy has been more competent.”

The approach of Atchison is to leverage growth opportunities, while protecting against downside risks, ensuring long-term value for clients.

Atchison believes this is best delivered from as asset allocation level, at time executed via the groups unique assets class sleeve SMAs.

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