Asset Allocation Perspectives 2024 Outlook

January 10, 2024 — This presentation provides an overview of our market outlook and key themes, and it illustrates how Sage is positioned in the current environment.

Key Themes

Volatility Reversal

• Expect equity volatility to reverse from historically low levels as sentiment is too dependent on a soft-landing scenario and front-loaded Fed cuts in 2024
• Rate volatility was extreme in 2023 but should be more muted as we gain clarity on an easing path

Income-Focused Market

• Expect strong flows into broad fixed income and credit as both institutional accounts and retail take advantage of yields and lock in duration
• 2023 was a rare occurrence where bond yields moved above equity earnings yields; historically, this is a good signal to add fixed income, especially into peak rates

Lean Toward Quality

• Attractive yields but tight spreads suggest that it doesn’t pay to give up quality for minimal yield pickup
• For the credit allocation security selection will be key; a tactical addition of MBS also makes sense