Mark Haefele

A combination of humility and market diversification will be key. But the strong market performance of the past few years should also remind us of the adaptability of the economy, the power of innovation and the potential for long-term market growth.

For investors, developing a strategic plan that links goals with strategies can improve their chance of success and help them stay focused on the bigger picture amid potential market turbulence. We identify six strategies for investors to keep in mind.

1. Put cash to work and secure durable income: Cash’s long-term underperformance compared with other asset classes is a structural phenomenon. Stocks have beaten cash in 86% and 100% of all 10- and 20-year holding periods, respectively, and by more than 200 times overall since 1945.
2. Strengthen your core: Investors should implement a core component in their wealth management strategy. The core should be a portfolio diversified effectively across asset classes, geographies and sectors, and left alone to grow wealth consistently for the long term.
3. Diversify with alternatives: By including an allocation to private equity, private debt, private infrastructure, and/or private real estate into portfolios, investors can diversify sources of return and potentially enhance portfolio growth. Investors should consider replacing around 30% of their public equity exposure with private markets, depending on their tolerance for illiquidity.
4. Optimise your leverage: Borrowing is risky, but proactive, prudent and strategic borrowing can enhance an investor’s financial plan, especially as interest rates fall.
5. Be active: In 2023, assets held in global passive equity funds ($15.1tn) overtook assets in active funds ($14.3tn) for the first time, according to LSEG Lipper. But investors need to ensure they are balancing their exposure to passive and active strategies effectively. Active investing offers the opportunity to beat the benchmark
6. Go sustainable: We see a growing opportunity set in investments that support sustainability and impact goals while aiming for competitive returns.