BlackRock has published its 2024 Thematic Outlook, entitled Three Key Themes to Get Investors Off the Sidelines.
Jay Jacobs, US Head of Thematics and Active Equity ETFs, outlines the key themes investors should be paying attention to, noting that a more volatile macroeconomic regime, alongside relatively high rates, may mean investors need to demand greater compensation for taking on equity risk; they can meet this higher performance bar by getting precise about targeted opportunities.
The three themes are:
Artificial intelligence (AI): From concept to commercialisation: The AI trade is just beginning, with enterprise AI adoption, accelerated computing, and cutting-edge hardware set to take centre stage in 2024. How to play it: IRBO, SOXX, IHAK, BTHM
A new era for medical innovation: Attractive valuations, the potential for breakthroughs in neuroscience and AI-driven healthcare could present an attractive entry point. How to play it: IBRN, BMED, IBB
The rewiring of globalisation: Heightened geopolitical fragmentation is driving a doubling down on supply chain reorientation that is creating geographic winners and losers in emerging markets. How to play it: IDNA, IETC, EMXC, EWW
Jacobs writes: “There is USD6 trillion sitting in cash on the sidelines given record high short-term rates. This has kept many investors out of equities. However, we see pockets of the market — specific themes — where capturing divergence could be rewarded relative to cash and other assets. Benefiting from this requires granularity and nimbleness. Investors need to demand greater compensation for taking on equity risk; they can meet this higher bar by getting precise about targeted opportunities.”