Richard Larner, Co-CIO, Brooks MacDonald
As inflation in the US trends downwards, the Federal Reserve has responded by cutting rates. However, the future of US monetary policy remains uncertain, with potential inflationary pressures from the upcoming presidential election.
Richard Larner, Co-CIO of Brooks Macdonald, highlights the challenge for investors: while inflation has eased, any misstep in Federal Reserve policy could spark market volatility, particularly as a lot of positive news is already priced into the US equity market.
Another concern is the growing dominance of a few major tech companies, particularly in artificial intelligence (AI). With significant capital concentrated in these sectors, Larner notes that expectations for future growth may already be overestimated. "Risks are elevated as expected growth has already been priced in," he explains, signalling potential for correction if the AI boom doesn't deliver as anticipated.
In this context, Larner suggest that investors might need to consider opportunities in undercapitalised sectors, where value may be overlooked. While tech remains a key driver, a more diversified portfolio could provide better protection against economic and political uncertainties on the horizon.
This new Spotlight, delivered in partnership with Brooks Macdonald, considers strategic considerations for investors as 2025 approaches.
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