Asset

Management

Outlook

2024EMBR

ACING

NEWREALITIESKEY

THEMESMacroeconomy:Living

with

HigherforLongerGeopolitics:RoadmapsforaReshapedWorldDisruptive

Technology:InnovationandAIAccelerationSustainability:Investing

with

ImpactPortfolio

Construction:ThinkingDi?erentlyThis

?nancial

promotion

is

provided

by

GoldmanSachs

Bank

EuropeSEWELCOME

TOA

WOR

LD

OFNEW

REALITIESWeare

pleased

to

share

Goldman

Sachs

AssetInan

age

of

unpredictability,

dynamic

insights

andManagement’s

2024Outlook:

Embracing

New

Realities.As

the

new

year

approaches,

a

new

economic

landscape

istaking

shape.

Major

central

banks

seem

prepared

to

keepinterest

rates

higher

for

longer,and

growth

paths

andinflation

patterns

across

economies

appear

increasingly

outof

sync.

An

election

super

cycle

is

about

to

unfold

againsta

backdrop

of

elevated

geopolitical

risk.

Simultaneously,megatrends

including

disruptive

technology

andsolutions

will

be

needed

to

steer

investment.We

havesynthesized

views

from

across

our

investment

teams

andgrouped

our

observations

around

?ve

key

themes

thatwe

expect

to

a?ect

markets

and

investment

strategies

in2024:1)

Macroeconomy:

Living

with

Higher

for

Longer2)

Geopolitics:

Roadmaps

fora

Reshaped

World3)

Disruptive

Technology:

Innovation

and

AI

Acceleration4)

Sustainability:

Investing

with

Impactsustainability

are

rapidly

transforming

industries.Embracing

change

is

not

easy.

It

requires

resilience

andaction

to

avoid

being

left

behind—even

when

?nding

theway

forward

is

di?cult.

Most

investors

have

adapted

inrecent

years

to

rising

geopolitical

risks,

soaring

inflationand

the

disruptions

caused

by

the

pandemic.

Furtheradjustments

will

be

necessary

ina

world

of

greatergrowth

volatility,

higher

capital

costs

and

geopoliticalinstability.We

expect

increased

performance

dispersionacross

asset

classes,

sectors

and

regions.

In

theseconditions,

investors

face

complex

choices

and

trade-o?s.5)

Portfolio

Construction:

Thinking

Di?erentlyWe

hope

you

?nd

our

insights

helpful,

and

we

lookforward

to

working

with

you

in2024.We

believe

active

investment

strategies,a

focus

ondiversi?cation

and

risk

management

will

be

important

tonavigate2024

and

help

deliver

alpha.

In

our

view,

it

willalso

be

necessary

to

manage

portfolios

in

an

integratedway,

enhancing

diversi?cation

and

performanceMarc

NachmannGlobalHeadofAsset

&WealthManagementpotential

by

considering

both

traditional

and

alternativeinvestments.

Focusing

on

long-term

disruption

fromsustainability

trends

and

technological

innovation,including

arti?cial

intelligence(AI),

can

help

positionportfolios

for

the

global

economic

transformation.Goldman

SachsAssetManagementAssetManagementOutlook

2024|2KEY

THEMES

TOWATC

H

IN

202405

Macroeconomy:Living

with

Higherfor

LongerInterest

rates

in

developed

markets

areset

tostayhigher

for

longer,

andgrowth

paths

andinflationpatterns

across

the

global

economy

are

moving

indi?erent

directions

and

at

di?erent

speeds.

In

publicequity

markets,weexpect

macroeconomic

discussionstoshift

toward

howspeci?c

marketsectorsandcompanies

can

navigate

higher

capitalcosts

andslowergrowth.

In

public

?xed

income,

an

up-in-qualityapproach

to

credit

may

help

investors

identify

issuersthat

look

well-positionedtowithstand

higher

fundingcosts.

We

also

see

opportunitiesfora

more

strategicapproach

toprivate

market

exposure.08

Geopolitics:Roadmaps

for

aReshaped

WorldAnelectionsuper

cycle

willunfold

in

2024

againstabackdrop

of

elevated

geopolitical

riskand

economiccompetition

between

nations.

Investors

may

need

tocombine

in-houseexpertise

with

insight

fromadvisorson

the

ground

to

navigatebouts

of

volatility.

Companiesbene?tting

fromthereshoring

of

critical

supply

chainsand

increased

investment

in

nationalsecurity

maypresent

compelling

investmentopportunities.Goldman

SachsAssetManagementAssetManagementOutlook

2024|311

Disruptive

Technology:Innovation

andAI

AccelerationArti?cial

intelligence

is

nowpart

of

the

long-termtechnologyopportunity

set.

Semiconductors,cybersecurity

and

healthcare

are

areas

to

watch

as

AItransforms

industries.

Skill

in

?nding

the

likelywinnersof

tomorrow

is

crucial

in

an

eraof

wide

dispersionbetweenhigh-

and

low-quality

growth

companies.When

the

initial

publico?ering

(IPO)

market

eventuallyrecovers,

investors

in

disruptive

companies

maybene?t.14

Sustainability:Investing

with

ImpactSustainableinvestingisbecomingmorecomplexandcompetitiveasinvestorsseekwaysto

make

areal-worldimpactbyfocusingonenvironmentalandinclusive-growththemes.Opportunitiesto

investinsustainablesolutionscanbefoundacrosspublic

andprivatecapitalmarkets,frompure-playenablersofamoresustainableworldto

transitionleadersin

high-carbonindustries.17

Portfolio

Construction:Thinking

Di?erentlyIn

our

view,

investors

can

navigate

higher-for-longerrates,

geopolitical

shocks

and

accelerating

secular

growthtrends

bystaying

active

and

focusing

on

diversi?cationandrisk

management.

Anintegrated

approach

toportfolio

construction

canposition

portfolios

to

bene?tfromdi?erences

in

the

compositionand

characteristics

ofpublic

and

private

capital

markets.Goldman

SachsAssetManagementAssetManagementOutlook

2024|4MACROECONOMY:LIVING

WITH

HIGHER

FOR

LONGERAfter

a

phase

of

fast

and

forceful

monetary

policy

tightening,the

reality

in2024

may

be

that

interest

rates

across

advancedeconomies

stay

close

to

present

levels

throughout

most

ofthe

year.

Inthe

US,

we

think

it

is

plausible

the

US

FederalReserve

(Fed)may

have

reached

the

end

of

its

hiking

cycle

asdisinflation

takes

hold.

Inour

view,

it’s

unlikely

the

Fed

willmove

quickly

toward

cutting

interest

rates

unless

economicgrowth

slows

substantially.

This

raises

the

likelihood

ofhigher-for-longer

interest

rates.

Inthe

eurozone,

we

believeweaker

growth

momentum

and

a

large

drag

from

tighter?nancial

policy

and

lending

conditions

skew

the

balance

ofrisks

towards

a

pause

inmonetary

policy

tightening

by

theEuropean

Central

Bank

(ECB)before

a

potential

pivot

towardeasing

inthe

second

half

of

2024.further

interest

rate

increases

by

the

Bank

of

England

(BoE).Weexpect

slightly

better—though

still

subdued—growthover

the

near

term.Elsewhere,

economies’

paths

across

regions

are

diverging,with

growth

prospects

and

inflation

patterns

movingindi?erent

directions

and

at

di?erent

speeds.

Japan’seconomy

has

been

surprising

to

the

upside,

bene?tingfrom

a

domestic

demand

recovery

that

is

driving

unfamiliarbut

desired

wage

growth

and

inflation.

China’s

short-termgrowth

prospects

appear

tilted

to

the

downside,

hamperedby

property

market

indebtedness

and

demographicheadwinds.

Elsewhere,

early

emerging

market

hikers—Brazil,

Chile,

Hungary,

Mexico,

Peru,

and

Poland—werethe

?rst

economies

to

see

a

sharp

inflation

slowdown.The

central

banks

inthese

countries

have

started

to

lowerinterest

rates

or

are

close

to

doing

so.The

economic

outlook

remains

fragile.

While

the

Fed

and

ECBseem

to

have

steered

away

from

a

hard

landing

path

duringthe

tightening

cycle,

exogenous

shocks

or

a

premature

pivotto

policy

easing

may

reignite

inflation

ina

way

that

requiresa

recession

to

force

it

lower.Conversely,

further

monetarytightening

might

trigger

a

downturn

just

as

the

e?ects

ofprior

tightening

begin

to

take

hold.

Inthe

United

Kingdom,notwithstanding

inflation

volatility,

we

do

not

foreseeIna

desynchronized

global

cycle,

with

higher-for-longerrates

and

slower

growth

inmost

advanced

economies,

theroad

ahead

remains

uncertain.

Inour

view,

this

calls

for

adiversi?ed

and

risk-conscious

investment

approach

acrosspublic

and

private

markets.We

Think

Policy

Rates

Have

Likely

Reached

Their

Peak

in

This

Cycle6%5%4%3%2%1%0%-1%February

2020PandemicLowLatestNeutralRateEstimateFedBoEECBSource:

GoldmanSachs

Asset

Management.

Macro

bond.

As

of

September

27,

2023.Neutral

rate

estimates

are

central

bank

projections.

The

neutralrate

wouldstabilize

the

economy

at

full

employment

and

the

inflation

target,

assuming

other

influences

on

the

economy

are

at

normal

levels.Pandemic

lowdaterange:

December

31,2019toDecember

31,2020.Goldman

SachsAssetManagementAssetManagementOutlook

2024|5MACROECONOMY:

LIVING

WITH

HIGHER

FOR

LONGERThree

Key

QuestionsInvestment

ConsiderationsWill

we

see

a

soft

or

hard

landing

in

the

US?PUBLIC

EQUITYLess

Macro,

More

MicroOur

view:

The

latest

signals

from

theUSeconomyareconsistentwith

asoft

landing.The

labormarketisrebalancinganddisinflation

isprogressing.

Thatsaid,wearemindfulofthegrowing

impact

ofhigherrates

ontheeconomyovertime,

aswellastheriskofanexogenousshockstemming,forexample,fromgeopolitical

instability.The

public

equity

market

has

been

increasingly

driven

bymicroeconomic

factors.

The

share

of

the

S&P

500

index'smedian

trailing

six-month

return

that

is

explained

bycompany-speci?c

factors

rather

than

by

macroeconomicfactors

such

as

beta,

sector

and

size

is

now

nearly

30%above

the

20-year

average.

When

beta

is

less

likely

to

bethe

main

driver

of

returns,

alpha

generation

becomes

evenmore

critical.

We

expect

macro

discussions

to

shift

towardhow

speci?c

companies

can

navigate

sticky

inflation,

highercapital

costs

and

slower

growth.

We

observe

increasedmarket

dispersion

across

and

within

sectors.

This

may

callfor

a

disciplined,

fundamental

approach

to

stock

selection,with

an

emphasis

on

quality

and

pro?tability.

Portfoliodrivers

are

likely

to

be

a

combination

of

high-quality

?rms,strong

dividend

payers

and

regional

diversi?cation.

We

thinkbeing

selective

at

the

stock

level

and

maintaining

a

balancedportfolio

will

be

key

as

the

market

becomes

more

discerning.When

might

investors

look

to

add

risk

toportfolios?Our

view:

Giventhatwearelateinthecycle,

it

maybeanopportune

time

tolookforpotentialtriggers

forre-risking

portfolios.

One“risk

on”signalwouldperhapsbe

ashift

intheFednarrative

hintingataratecut.Thismayoccurwheneconomicactivity,

labormarketsorinflation

soften

su?ciently.The

keydi?erentiatorinthiscycle

isthatratesarelikelytoremainhigherforlonger,makingsecurity

selection

andactivemanagementessential.FIXED

INCOMEStrengthening

Your

CoreWhat

are

the

consequences

of

ballooningdeveloped

market

government

debt?Negative

?xed

income

returns

inresponse

to

an

inflationand

policy

shock

are

an

anomaly,

not

the

trend.

Followinga

reset

higher

inbond

yields,

the

age

of

"There

Is

NoAlternative"

(TINA)

to

equities

or

other

risk

assets

has

ended.Webelieve

we

are

now

inthe

early

phases

of

“There

AreReasonable

Alternatives”

(TARA),

such

as

core

?xed

income,including

high-quality

government

and

corporate

bonds.Inthe

12

and

24

months

after

each

of

the

last

four

ratehiking

cycles,

the

returns

of

intermediate-term

investmentgrade

government

and

corporate

bond

indices

have

notablyoutpaced

US

Treasury

bills

on

average.1Inthe

post-pandemicera,

we

expect

structural

shifts

such

as

decarbonization,deglobalization

and

geopolitical

instability

will

create

moretriggers

for

growth

volatility.

Core

?xed

income

can

help

tobalance

portfolios

through

these

episodes

given

higher

yieldscan

provide

a

potential

bu?er.And

when

growth

concernsare

incheck,

holding

core

bonds

also

makes

sense

given

?xedincome

once

again

delivers

income.Our

view:

Today’spolitical

climate

suggests

?scalconsolidation

is

unlikelyas

governments

facepressure

to

address

income

inequality

and

advancedecarbonization

and

digitalization.

Inflating

away

debtisn’t

an

option

when

central

banks

remain

committedto

inflation

targeting.

With

these

avenues

for

loweringdebt

loads

facing

challenges,

the

primary

consequenceof

higher

government

debt

will

be

higher

termpremiums

reflected

indeveloped

market

governmentbond

yields.1.

Bloomberg,

GoldmanSachs

Asset

Management.

As

of

October

2,

2023.Returns

are

not

tax

adjusted.

Indexes

used:

Bloomberg

USTreasuryBillIndex,

Bloomberg

Intermediate

USGovt/Credit

TotalReturn

Index,

Bloomberg

Municipal

Bond

Index

TotalReturn

Index.Goldman

SachsAssetManagementAssetManagementOutlook

2024|6MACROECONOMY:

LIVING

WITH

HIGHER

FOR

LONGERInvestment

ConsiderationsFIXED

INCOMEPRIVATE

MARKETSStaying

Selective

and

Cycling

OnStaying

the

CourseWhile

cycles

are

not

perfectly

predictable

and

exhibitvariation

across

sectors,

our

assessment

of

the

USRecentsurveys

suggests

investors

arestaying

the

courseinprivate

markets.

The

investmentoutlookappearstobe

improving,whilemacroeconomicsandgeopolitics—includingrecession

risks,

geopolitical

conflict,

inflationandhigherrates—remain

topofmind.Somecompanieswill

need

meaningfultransformation

tobe

wellpositionedforthenew

marketrealities

andsecularmegatrends.The

ability

tomakethistransformation

privately,awayfrom

thequarterlyearningscycle,

isonereasonwhysomecompaniesarepreferring

private

capitaltopublic.Privatemarketswill

continuetoplayagrowing

roleinportfolios,inourview,

helpingtoprovide

returnenhancementanddiversi?cation.

At

thesametime,

theproliferation

ofprivate

investments

does

notdiminishtheneed

forpublicmarketsthatprovide

di?erent

opportunities,

facilitatequickdeploymentofcapitalando?er

investors

liquidity

toshift

rapidlywhenmarketconditionschange.Inourview,

itisimportant

thatinvestors

seek

theright

balancebetweenasset

classes.investment

grade(IG)corporate

credit

market

alignswith

what

we

perceive

as

mid-cycle

credit

dynamics.Fundamentals

remain

healthy

and

we

thinkUSIG

companiesare

well

positioned

to

withstand

higher

funding

costs

overthe

coming

year.

Eventhough

spreads

may

push

wider

fromcurrent

tight

levels

inthe

short

term,

we

remain

con?dentin

the

capacity

of

investment

grade

credit

to

delivercompelling

risk-adjusted

returns,

given

income

potentialand

resilient

fundamentals.

Weare

alert

to

headwindsstemming

from

higher

energy

prices,

diminished

demandfrom

China,

wage

cost

pressures

and

the

growing

impact

ofhigher

interest

rates

over

time.

Companies

with

lower

creditratings

or

unhedged,

floating-rate

?nancing,

may

?nd

itmore

challenging

to

navigate

higher

interest

rates.Goldman

SachsAssetManagementAssetManagementOutlook

2024|7GEOPOLITICS:ROADMAPS

FOR

A

RESHAPED

WORLDThis

is

an

era

when

geopolitics

is

increasingly

important

andunpredictable.

Investors

and

companies

should

prepare

fora

wide

range

of

possibilities

in

2024,including

the

outcomesof

key

political

elections

across

the

globe,

from

the

US,

UKand

South

Africa

to

India,

Taiwanand

Russia.

Geopoliticaltensions

are

likelyto

remain

elevated,

including

thosebetween

China

and

the

US.

Conflict

in

the

Middle

East

andRussia’s

ongoing

war

inUkraine

continue

to

demonstrate

theimportance

of

alliances

and

territorial

integrity.Risinggeopolitical

tensionscouldtrigger

moretraderestrictions

acrosstheglobe,resultinginfurther

economicfragmentation.

Weexpect

economiestocontinuetoinvestheavilyintheireconomicsecurity

overthenext

12

monthsandbeyond.Thismaybe

driven

bydevelopedmarkets“re-shoring”

and“friend-shoring”

critical

supplychainsthatremainhighlyinterdependentand,insomecases,over-concentrated,suchasleading-edgesemiconductors.Critical

mineralsupplychainsarelikelytoreceiveattentionduetotheirgrowing

importance

forthegreen-energytransition,

aswellastheirvulnerabilitytosupplyshocks.Complexnationalsecurity

threats

will

also

remaininfocus,driving

theneed

forthelatest

defense

technologiesandcutting-edge

cybersecurity

tools.Apackedelection

calendarandgeopolitical

instabilityrequireafocusonbothdomestic

developmentsandglobalevents.

IntheUS,concernsovergovernmentdebtsustainability

andthe?scalpathforward

maybuildintherun-uptoNovember’spresidential

election.

Socioeconomicrisks

acrosscountries,

suchasstrikes

incertain

industriesbyworkersdemandinghigherwages,

maypersist

inaworldofelevatedinflation,

formingpotentialdragsongrowth.Trade

Restrictions

Have

More

Than

Tripled

Since

20172500200015001000500GoodsServicesInvestment02009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023Source:

International

Monetary

Fund,GoldmanSachs

Asset

Management

as

of

August

25,

2023Goldman

SachsAssetManagementAssetManagementOutlook

2024|8GEOPOLITICS:

ROADMAPS

FOR

A

RESHAPED

WORLDThree

Key

QuestionsInvestment

ConsiderationsWhat

is

important

to

keep

in

mind

as

we

headinto

a

year

of

important

elections

and

elevatedgeopolitical

tensions?ECONOMIC

SECURITY

IN

FOCUSSupply

Chains,

Resourcesand

DefenseOur

view:

Webelieveit

isimportant

toavoidtryingtotime

marketsortakecalls

onbinary

politicalorgeopolitical

outcomes.At

thesametime,

beingunpreparedforevents

will

notserve

investors

well.Givengeopolitics

andelections

cana?ect

risk

assetsandpotentiallyincreasevolatility,

investors

mayconsideradynamicapproachtoasset

allocationandsecurity

selection

based

onextensivebottom-up

research.Wethink

companies

that

successfully

align

with

corporateand

government

e?orts

to

boost

the

security

of

supplychains

and

resources

as

well

as

national

security

willemerge

as

long-term

winners.

Wefavor

?rms

with

pricingpower,durable

business

models

and

strong

balance

sheets.Public

equity

markets

may

present

opportunities

to

gaintargeted

exposure

to

more

established

?rms

that

producesemiconductors

and

to

semiconductor

manufacturingequipment,

as

well

as

to

industrial

automation

andtechnology

companies

that

are

facilitating

the

reshoringof

manufacturing.

Demand

for

natural

gas

products

andreliable

clean

energy

solutions

is

likelyto

rise

as

nationsseek

a?ordable,

reliable

and

more

sustainable

energy.As

security

threats

grow

in

volume

and

sophistication,this

creates

opportunities

for

cybersecurity

platformsand

aerospace

and

defense

technology

providers.

Privatemarkets

may

provide

some

of

the

best

early-stage

growthopportunities

inthese

areas.

Near-shoring

can

increasedemand

for

commercial

real

estate,

such

as

modernwarehouses,

and

potential

new

infrastructure

to

transportgoods

if

shipping

patterns

change.How

can

an

evolving

geopolitical

environmenta?ect

investment

opportunities?Our

view:

Ashifting

geopolitical

landscapeaddsnew

challengesanduncertainties.

It

also

requiresnew

partnerships

andoperating

models.

Thiscreatespotentialpublicandprivate

marketinvestmentopportunities

acrosssupplychainsecurity,

commodityandenergy

resources,

andnationalsecurity.What

does

supply

chain

realignment

mean

forcompanies?Our

view:

If

the

last

decade

was

about

producinggoods

at

the

lowest

cost,

the

next

decade

will

likelyseecompanies

focus

on

producing

goods

reliably.

Weexpectthis

trend

to

pick

up

in

2024.Ensuring

greater

supplychain

resiliency

may

result

in

higher

costs,

however,meaning

?rms

will

need

to

?nd

ways

to

counteractpro?t

margin

pressures.Goldman

SachsAssetManagementAssetManagementOutlook

2024|9GEOPOLITICS:

ROADMAPS

FOR

A

RESHAPED

WORLDInvestment

ConsiderationsCOUNTRIES

WITH

COMPETITIVE

ADVANTAGESPotential

Opportunities

inIndia

and

JapanDe-dollarization

in

aDestabilized

World?Investors

mayneed

todrawonbothglobalintellectualcapitalandon-the-groundexpertise

tonavigategeopolitical

risk

andgeneratelong-termoutperformance.Inourview,

certain

countries

looktohaveadvantageousmacroeconomicpositions

headinginto2024

andmayemergeaslong-termbene?ciaries

from

evolvinggeopolitical

dynamics.

InIndia,whichissector-diverse

andbene?ts

from

resilientgrowth

andstrongdemographics,

weexpect

morecompaniestobecomeimportant

manufacturing

partners

forglobalcorporationsdiversifying

theirsupplychainsinsteel,

textiles,

chemicals,pharmaceuticalsandautomotives.

Other

countrieslikeMexico

andVietnamcouldalso

bene?t

from

thistrend.Japanhasbeen

experiencing

aneconomic

revivalandsimultaneouslystrengtheningalliancesaroundsemiconductortechnologywith

South

Korea,TaiwanandtheUS.Prime

MinisterKishidahasalso

committed

toreinforce

Japan's

defense

capabilities,

noting

cybersecurityanddigitalizationasincreasinglyimportant

areasfornationalsecurity.Investors

may

seek

greater

currency

diversi?cation

becauseof

the

upcoming

election

super

cycle,

geopolitical

instability,and

divergent

growth

and

monetary

policy.

This

could

giverise

to

more

institutional

investor

allocations

and

centralbank

reserves

potentially

shifting

to

the

euro

or

Chineseyuan,

alongside

the

US

dollar.BRICS

countries

(Brazil,Russia,

India,

China,

and

South

Africa)

are

exploring

theidea

of

a

common

currency

to

foster

and

streamline

tradeacross

the

bloc.

Inour

view,

de-dollarization

poses

little

riskof

changing

the

global

currency

order

inthe

foreseeablefuture,

but

we

also

acknowledge

that

it

may

be

a

part

of

adecades-long

trend.

Wethink

it

is

less

likelythat

a

singlenew

contender

overtakes

the

USdollar

as

the

world’s

reservecurrency,

and

more

likelythat

several

currencies

grow

inreserve

share,

as

has

been

the

case

for

the

past

two

decades.Until

then,

we

believe

de-dollarization

will

remain

a

popularheadline

but

an

unlikelystory.Goldman

SachsAssetManagementAssetManagementOutlook

2024|10DISRUPTIVE

TECHNOLOGY:INNOVATION

AND

AI

ACCELER

ATIONAfter

abreakthroughyearforgenerative

AI,

investors

willlookforsignsthatnew

deeplearningtools

andtechniquesare?lteringthroughtomoreindustries.

Wethinkarti?cialintelligencehasemergedasacorepart

ofthelong-termtechnologyopportunity

set.

Weexpect

theshift

from

theexcitementphaseintothedeploymentphasetocontinuein2024,helpingtoraiseglobalproductivity

andpotentiallyhelpingaddresschallengescomingfrom

unfavorabledemographics

insomecountries.Despiteatighter

fundingenvironment,

disruptive

techcompanyfundamentalshavebeen

inflecting

positivelyinrecentquarters

asmoreinvestors

placeapremiumoninnovationthatdrives

future

earningsgrowth.

Butwhiletherearetailwinds—includingsourcesofinflationdeceleratingmeaningfully—discernmentwill

be

keyin2024.Weareinanera

ofwider

dispersio