Maurice Gravier, group chief investment officer at Wealth Management, Emirates NBD, along with his team, unveils their investment strategy amid a favorable environment marked by substantial gains. Their approach involves a concentrated, long-term strategic asset allocation aimed at optimizing portfolios for the remainder of 2024.
What would Central Banks have to do to be less radical and more predictable? And how essential is this to the success of the global financial system?
Central Banks will have a limited leeway for action in 2024 and beyond. On one hand, the battle against inflation is not over and the threat of a rebound remains serious; they can’t be too accommodating. On the other, if money is too scarce and interest rates too high, it poses economic and financial risks in an immensely indebted world. We think that central banks should be measured and crucially clear in their guidance and their priorities. This approach would offer improved visibility to markets, allowing them to focus more on fundamentals and less on monetary policies.
You expect the investment landscape to be rejuvenated this year. What factors will be critical for this to materialize in 2024?
We called 2023 the year of unpredictability, with big questions, to which 2024 should bring answers, concluding the financial chapter of the pandemic – recession, monetary and fiscal support, inflation, and repression. With reduced domination from central banks and more clarity on macroeconomic drivers, we believe that the benefits of diversification and selectivity are back for good for investors. We anticipate a return to negative correlation between the two major asset classes: fixed income and equity.
We also believe in active management, in a more fundamental context: stock and bond picking are poised to outperform the passive replication of indices, which have arguably become a bit unbalanced.
Talking about financial risks. The “Annual Global Investment Outlook for 2024” report mentioned that geopolitical influences would matter even more this year. What key risk aversion strategies would help?
2024 should generate modest returns, at the price of a high volatility from economic data, but also from intertwined domestic and international political developments. On one hand, the U.S. presidential election is extraordinarily open, and on the other, there are high intensity conflicts involving in one way or another several powerful blocks.
While we remain hopeful, the geopolitical situation is fluid, and market valuations do not seem to fully account for this risk. Consequently, we expect significant volatility, especially until November. This is one of the reasons why we overweight cash and gold in our allocations, but this is not only bad news: volatility could provide tactical opportunities as well.
This year is about getting answers. Are there any new questions that might emerge? Where do you see this coming from and what will their impact be on the global financial system?
One area we will be watching closely is the impact of higher interest rates on Western government budgets and on their banking system. We are not overly concerned as central banks are aware of the risks and certainly keen on providing support.
Shifting our focus, the emergence of new technological solutions invariably raises fresh questions. The impact from artificial intelligence adoption will be multifaceted – a profound disruption, with implications on productivity and employment, but also on cyber security, privacy and ethics.
Finally, the multiple elections taking place in 2024 may raise new questions on the balance between global and national agendas, or on the role of government like we just saw in Argentina.
In which direction do you see sustainable finance going in 2024?
Sustainable finance is reaching an age of maturity, along two lines. The first is continued growth: the green transition requires considerable investments that will be matched by appetite from asset-owners. This means issuances with enhanced characteristics to attract capital, including public/private partnerships.
The other dimension of maturity is selectivity. The time when investors were blindly piling up on anything with an ESG label is over, especially after a poor performance from many green funds. Investing is not an ideology – it is primarily about value creation, which requires superior business, financial and management characteristics. This should never be overlooked but combined with an analysis of sustainability attributes. The latter continuously improves as ESG disclosures have materially progressed both in scope and granularity.
Sustainable finance is here to stay and grow, and it matters, especially in a wealth management context which is trans-generational by nature.
About Maurice Gravier
Maurice Gravier is the chief investment officer, Wealth Management at Emirates NBD. In this role, he is responsible for delivering comprehensive financial advisory services and valuable investment guidance to Emirates NBD’s private banking and retail clients.
With a wealth of experience spanning over 20 years, Gravier has successfully managed large portfolios of assets for sophisticated international investors in both asset and wealth management sectors.
Prior to joining Emirates NBD in 2018, he held senior positions at renowned financial institutions including Natixis Asset Management in France, Lombard Odier in Switzerland, and Majid al Futtaim Trust in Dubai. Gravier, a French national, holds a Masters in Management from ESCP Europe in Paris.
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