The biggest risks to investment portfolios in 2024

Natixis Investment Managers China

2 January 2024
| By Jasmine Siljic |
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According to Natixis Investment Managers (IM), five key threats will continue weighing on Australian investors’ minds and their portfolios in the new year.

Research from the asset manager has highlighted that 55 per cent of Australian institutional investors believe inflation will pose the biggest risk to their portfolios this year.

However, this figure was lower than the global results which saw 61 per cent of international investors concerned about inflation’s impact on portfolios.

The survey of 500 institutional investors across 27 countries, including Australia, found that interest rates were the next highest threat for 50 per cent of Australian investors in 2024.

For global institutional investors, interest rates were the most pressing portfolio concern for 61 per cent of those surveyed on an international scale.

For Australian investors, this was followed by valuations (46 per cent), liquidity (41 per cent) while volatility and ESG risks tied in fifth place at 28 per cent each.

Speaking to Money Management, Louise Watson, Natixis IM’s country head for Australia and New Zealand, said: “Australian institutional investors see inflation and interest rates as the biggest risks heading into 2024. 

“While indicators suggest that inflation is beginning to ease in Australia, many investors are wary that the full impact of the inflationary cycle may not have yet been felt, and therefore it tops their list of concerns.”

Although the Reserve Bank of Australia (RBA) decided to hold interest rates at 4.35 per cent in its final meeting of 2023, RBA governor Michele Bullock hinted further hikes could be on the horizon.

“Whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks,” she commented on 5 December.

While interest rates have assisted in calming inflation, the impacts it has on markets is still clearly weighing on investors’ minds, Watson observed.

“According to our global survey of institutional investors, Australian investors also see valuations, liquidity, volatility and ESG as risks to their portfolios in the new year,” she added.

The asset manager also recently revealed the top economic fears of institutional investors in 2024. 

These were:

  • Geopolitical bad actors
  • Rising interest rates
  • Declines in consumer spending
  • The impact of China’s economy
  • Relations with China
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