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Equities White Paper

3Q 2023 Strategic Investment Outlook

02 August 2023
3 min read

What You Need to Know

A narrow market, led higher by a small number of stocks, has been doubly painful for many investors in 2023. First, a strong consensus for more cautious positioning earlier this year removed a tailwind, and it’s difficult to outperform when leadership is concentrated in a few large cap names. In this note, we discuss what this landscape means for investors, especially as it pertains to the attractiveness of more strategic positions. 

Short-term sentiment is not supportive, but as horizons are extended out, there are more supports for risk assets beyond central bank messaging. At long investment horizons, many investors who care about defending purchasing power will likely need to add to equity weights. The difficulty comes in balancing that need with short-term caution.

We discuss what this situation means for active managers. While the recent narrow market has been more challenging, emerging markets and small caps stand out as area where idiosyncratic alpha has still been achievable. 

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About the Authors

Inigo Fraser Jenkins is Co-Head of Institutional Solutions at AB. He was previously head of Global Quantitative Strategy at Bernstein Research. Prior to joining Bernstein in 2015, Fraser Jenkins headed Nomura's Global Quantitative Strategy and European Equity Strategy teams after holding the position of European quantitative strategist at Lehman Brothers. He began his career at the Bank of England. Fraser Jenkins holds a BSc in physics from Imperial College London, an MSc in history and philosophy of science from the London School of Economics and Political Science, and an MSc in finance from Imperial College London. Location: London

Alla Harmsworth is Co-Head of Institutional Solutions and Head of Alphalytics at AB. She was previously head of European Quantitative Strategy at Bernstein Research. Prior to joining Bernstein in 2015, Harmsworth worked for two years on Nomura's Institutional Investor-ranked European Equity Strategy and Quantitative Strategy team. Her previous experience includes seven years at Fidelity as a quantitative analyst and portfolio manager, along with stints at Nikko Asset Management and ABN AMRO. Harmsworth holds a BA (Hons) and an MA in philosophy, politics and economics from University College Oxford and an MSc in economics from the London School of Economics and Political Science. Location: London

Additional Contributors

Robertas Stancikas, Harjaspreet Mand and Maureen Hughes

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