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 .

Navigating the year ahead through multiple lenses

In this , 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—.

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.

Important Legal Information

This document is for information only and does not constitute investment advice or a recommendation and was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. This document may not be reproduced, distributed or published without prior written permission from Franklin Templeton.

Any research and analysis contained in this document has been procured by Franklin Templeton for its own purposes and may be acted upon in that connection and, as such, is provided to you incidentally. Although information has been obtained from sources that Franklin Templeton believes to be reliable, no guarantee can be given as to its accuracy and such information may be incomplete or condensed and may be subject to change at any time without notice. Any views expressed are the views of the fund manager as of the date of this document and do not constitute investment advice. The underlying assumptions and these views are subject to change based on market and other conditions and may differ from other portfolio managers or of the firm as a whole.

There is no assurance that any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets will be realized. Franklin Templeton accepts no liability whatsoever for any direct or indirect consequential loss arising from the use of any information, opinion or estimate herein.

The value of investments and the income from them can go down as well as up and you may not get back the full amount that you invested. Past performance is not necessarily indicative nor a guarantee of future performance.

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