Money matters

Asset Allocation - Investment Outlook 2024

Global markets recovered well towards the end of 2023. And with some central banks pausing interest rate hikes towards the end of last year, there are signs that they may have reached their peak. So, what does 2024 hold for financial markets? And where should investors look for opportunities?


Section 3

Asset allocation

Fund positioning

Our funds are positioned to capture the positive outcomes seen in the business cycle while earning the bond yields of a higher interest rate environment.

As such, our investments lean towards risky assets, more specifically global equities which are heavy in US stocks. In addition, we retain a preference for high-quality, multi-national companies that can best manoeuvre the current environment. 

2024 opportunities

Here are key areas where we see potential opportunities this year:

European bonds

Europe is much closer to a recession than the US, which should support European bonds as bond yields are more likely to fall, meaning prices would rise. 


Smaller companies were on our watch list last year, but we didn’t include them in our client portfolios and funds as rising interest rates created headwind challenges. But with those interest rate hikes ending, the outlook has improved for such firms. And smaller company valuations are at historically cheap levels, creating the chance to get good deals. 

Responsible investing

We take a responsible investing approach within our Royal Bank Invest funds. This means we consider environmental, social and governance (ESG) factors when making investment decisions.

While we believe responsible investing remains a priority, there were media reports last year suggesting it was going out of fashion and being replaced with newer trends. There are, however, credible grounds for continuing to believe in the importance of sustainable investing.

Examples include:

  • the Intergovernmental Panel on Climate Change documenting how global temperatures continue to rise
  • unacceptably high rates of biodiversity loss, according to the United Nations Environment Programme
  • increased levels of extreme poverty found in research by the International Monetary Fund.

Because these aren’t going to be resolved overnight, there’s still a need for investing in change.

Managing risk

Asset managers have a fiduciary duty to clients to ensure that all investment decisions are made with their best interests in mind. A survey by The World Economic Forum found the leading risks for private-sector risk managers in their two and 10-year horizons are all ESG-related. Therefore, factoring ESG into investment decisions plays an important role when reducing downside risks within varying time frames. 


Rebuilding trust

Many in the financial services industry have fallen foul of greenwashing – the overstating of ESG efforts within marketing. This has resulted in a loss of trust from investors in recent years and a demand in improved classification and transparency within sustainable investing.

Regulators are now working on creating standardisation, greater transparency and parameters around greenwashing, particularly regarding investment advice. 

The UK’s regulator, the Financial Conduct Authority, released its Sustainability Disclosure Requirements in November last year. One significant change will be to determine if ESG-related labels, if any, are relevant to investment products.

Investors will benefit from this as they can make more informed investment decisions, cutting through the noise, and will hopefully result in the rebuilding of trust in responsible investing.

With these moves to help rebuild trust in mind, we believe sustainable investing is very much alive and remains an important way to mitigate risk and seize new opportunities when investing. 

Investment Outlook 2024

View more insights from this year's investment outlook. 

Investment Outlook 2024

Full report is available to download

Interest rates

Section one

Corporate earnings

Section two

Investments explained

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