4Q 2023 Strategic Investment Outlook

The Allocation Controversies for the Turn of the Year

This short note reviews what we see as some of the key allocation controversies that have come up in recent client meetings and that are likely to underpin flows in coming quarters.

The allocation to private assets is a key point of debate. There has been something of a slowdown in demand for private equity, which we think makes sense. However, we do see a real return and diversification case for flows into private assets more broadly.

There has been a recent flow back into longer-duration fixed income, given the significant upward move in yields. We do, however, see a split in views about tactical versus strategic duration—especially for government bond allocations.

The past year has been tough for many active strategies. We point out that stock and factor correlations are surprisingly quiescent; in the past, this has often been a good entry point for active strategies to fare better.

Past performance, historical and current analyses, and expectations do not guarantee future results. There can be no assurance that any investment objectives will be achieved. The information contained here reflects the views of AllianceBernstein L.P. or its affiliates and sources it believes are reliable as of the date of this publication. AllianceBernstein L.P. makes no representations or warranties concerning the accuracy of any data. There is no guarantee that any projection, forecast or opinion in this material will be realized. Past performance does not guarantee future results. The views expressed here may change at any time after the date of this publication. This document is for informational purposes only and does not constitute investment advice. AllianceBernstein L.P. does not provide tax, legal or accounting advice. It does not take an investor’s personal investment objectives or financial situation into account; investors should discuss their individual circumstances with appropriate professionals before making any decisions. This information should not be construed as sales or marketing material or an offer or solicitation for the purchase or sale of any financial instrument, product or service sponsored by AB or its affiliates.

The views expressed herein do not constitute research, investment advice, or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams.

MSCI makes no express or implied warranties or representations, and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.