Top Issues U.S. Institutional Investors Should Be Thinking About in 2024

Executive summary:

  • Institutional investors may want to consider an allocation to Quality equities as well as a sufficient allocation to government bonds.
  • DB plan sponsors may want to re-evaluate the use of their pension surplus in the wake of IBM’s groundbreaking decision to reopen its frozen DB plan.
  • DC plan sponsors should consider exploring retirement income solutions.
  • Non-profits, including hospitals and healthcare systems, should consider evaluating how they’re managing liquidity in their portfolios.

With inflation finally on the decline and rate cuts possible this year, markets at first glance appear to have more to cheer about as 2024 unfolds than a year ago. And such optimism has no doubt taken hold in recent weeks, with the S&P 500 Index nearing record highs while the Bloomberg U.S. Aggregate Bond Index has rallied nearly 7% from its October 2023 lows.

However, a deeper look into the current economic environment reveals there are still plenty of worries to keep investors awake at night. For starters, we believe recession risks remain higher than normal, with a chance that the Fed’s recently concluded aggressive rate tightening cycle could tip the economy into a recession due to the lagged impacts of monetary policy. In addition, uncertainty surrounding the U.S. elections in the fall may inject fresh volatility into markets.

All this to say, the outlook for 2024 is perhaps more nuanced than it might appear, and if the past few years have taught us anything, it’s to expect the unexpected. Below, we’ve compiled a list of some of the key issues that we think institutional investors should be considering as the year gets underway, categorized by market segment. So, without further ado, let’s cut to the chase.