Here’s help for preparing for what may come in the months ahead and beyond – Image ETF Trends
Midyear Outlook: Top Portfolio Ideas for the Second Half of 2024
By Saghir A. Aslam
Rawalpindi, Pakistan
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the ummah will benefit from this effort through greater financial empowerment, enabling the community to live securely with dignity and fulfill their religious and moral obligations towards charitable activities.)
The predominant theme for 2024 has been to pay attention to pivots. The promise of artificial intelligence (AI), Federal Reserve rate cuts, declining inflation, and the continuation of strong earnings growth fueled a hard pivot to positive momentum to open the year. But slowing consumer spending and job growth should trigger a Federal Reserve policy switch to lower cost and greater availability of credit as the year progresses. In short, we look for an economic pivot from slowing to reaccelerating growth to calibrate the capital markets’ path forward.
Here’s a look at the top five portfolio ideas for the months ahead:
Use market pullbacks to broaden stock exposure
The November elections and any interruptions in inflation’s decline may prompt episodes of market volatility. We expect market drops to provide opportunities to add to US Large Cap Equities.
Look for opportunities to extend bond duration and generate yield
Our favorite is high-quality US Short Term Taxable Fixed Income. But we also anticipate that the economy’s pivot could take longer-term yields into the 4.25% to 5.00% range, where investors may consider moving into longer maturities (duration) in an effort to lock in potentially attractive rates.
In other fixed income, we favor investment-grade Municipal Bonds, particularly general obligation and essential-service revenue issues. For investors in higher tax brackets, municipal bonds may provide an opportunity to incorporate tax efficiency into a portfolio. Investors may also consider favorable rating on Securitized securities, such as residential mortgage-backed securities, as a way to add to portfolio yield potential.
Look to building blocks of growth for today and tomorrow
Investors can benefit from holding increased allocations to the S&P 500 Index Energy and Industrial sectors along with a broad exposure to Commodities. Construction to support AI’s data center and electrical requirements will benefit select real estate investment trusts (REITs) as well as energy and industrial companies. And all of this construction will require commodities.
Offset economic uncertainty with alternative investments
For qualified investors, Relative Value strategies should continue to benefit from their defensive characteristics if credit dispersion increases in a cooling economy expect. Event Driven securities can provide a hedge during market volatility, while anticipated Macro strategies should profit from stable trends in commodities and currencies. Looking ahead, there may be compelling opportunities for private capital, and favor Growth Equity strategies.
Hedge geopolitical risks with a focus on quality
Recent escalations in global tensions encourage overseas demand for high-quality US stocks and investment-grade bonds. Preference for the Industrials stock sector includes the Aerospace & Defense sub-sector and electrical equipment and industrial machinery. Favor Commodities (including Precious Metals).
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds, or any other investment. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)
