2024年下半年投資展望（英文）-渣打銀行

WSGlobalChiefInvestmentOffice

21June2024

GlobalMarketOutlook

Adaptingto

shiftingwinds

Thestartofmajorcentralbankratecutsmarksakeyturningpointforinvestorsaspolicymakersswitchtheirfocustowardssupportinggrowth.

Weseeitasagoodtimetoadaptto

theseshiftingwindsby(i)staying

Overweightequitiesoverbondsand

cash,(ii)favouringUSequitiesgloballyandIndianequitiesinAsiaand(iii)

owninggoldandEMUSDbondsasdiversifiers.

Inthisenvironment,balancedfoundation

allocationscomprisingequities,bondsandalternativeassetsarelikelyto

outperformallocationsthataresolelyaimedatgeneratingincome.

Ouropportunisticallocationscontinueto

favourgrowthsectorsintheUS,abarbell-

likestrategyinEuropeandselectgovernmentpolicybeneficiariesinChina.

Howtocraftadiversified

IstheUSeconomystill

Whatisthemessage

portfolioforthelong-

headedforasoft-

fromyourquantitative

term?

landing?

models?

ImportantdisclosurescanbefoundintheDisclosuresAppendix.

01

02

03

04

05

Contents

Strategy

Investmentstrategyandkeythemes02

Foundationassetallocationmodels05

Foundation:Ourtacticalassetallocationviews06

Foundation:Multi-assetincomestrategies07

Perspectivesonkeyclientquestions09

Macrooverview-ataglance

Ourmacroeconomicoutlookandkeyquestions11

AssetClasses

Bonds13

Equity15

Equityopportunisticviews17

FX18

Gold,crudeoil20

Additionalperspectives

Quantperspective21

Today,TomorrowandForever23

PerformanceReview

Foundation:Assetallocationsummary25

Foundation+:Assetallocationsummary26

Marketperformancesummary27

Ourkeyforecastsandcalendarevents28

FormoreCIOOfficeinsights29

Explanatorynotes30

Investmentstrategyandkeythemes

SteveBrice

ManpreetGill

RaymondCheng

GlobalChiefInvestmentOfficer

ChiefInvestmentOfficer,

ChiefInvestmentOfficer,NorthAsia

AMEE

Adaptingtoshiftingwinds

oThestartofmajorcentralbankratecutsmarksakeyturningpointforinvestorsaspolicymakersswitchtheirfocustowardssupportinggrowth.Weseeitasagood

timetoadapttotheseshiftingwindsby(i)stayingOverweightequitiesoverbondsandcash,(ii)favouringUSequitiesgloballyandIndianequitiesinAsiaand(iii)

owninggoldandEmergingMarket(EM)USDbondsasdiversifiers.

Inthisenvironment,balancedfoundationallocationscomprisingequities,bondsandalternativeassetsarelikelytooutperformallocationsthataresolelyaimedatgeneratingincome.

OuropportunisticallocationscontinuetofavourgrowthsectorsintheUS,abarbell-likestrategyinEuropeandselectgovernmentpolicybeneficiariesinChina.

Investmentstrategiesinthefaceofshiftingwinds

Our2024Strategyof‘SailingwiththeWind’hasperformedwellonthebackofastrongequitymarketrally.OurBalancedallocationhasrisen6.7%year-to-date,outperformingincome-orientedstrategies.

AsweapproachapotentialinflectionpointintheformofcentralbankratecutsandtheUSelection,webelieveitistimeforinvestorsto‘AdapttoShiftingWinds’.Weexpect:(i)equitiestooutperformbondsandcash,anoutcomelikelytoresultinbalancedstrategiesoutperformingincomestrategies;(ii)USandIndianequitiestooutperformglobalandAsianmarkets,respectively;and(iii)goldandEMbondstoofferdiversifiedsourcesofreturn.

Policyinflectionpointakeypositiveforequities

Majorcentralbankratecuts,whichstartedinQ2,arelikelytoextendintothesecondhalfoftheyear.Europeistheforerunneralongthispath.ThecentralbanksofSwedenandSwitzerlandandtheEuropeanCentralBankhavealreadycutratesasgrowthandinflationslow.WebelievetheFedhasroomtofollowsuit,albeitlaterinH2,asslowingrentsandsofteninglabourmarketsdriveinflationlower.

Ourtoppreferences

FoundationAllocations

oOWGlobalequitiesoInequities:US

Inbonds:EMUSDbonds

OpportunisticAllocations

EquityBUYideas

UStechnologysector

UScomms.servicessectorIndialargecapequities

Chinanon-financialdiviSOEsTaiwanequities

Japanesebanks

BondBUYideas

USinflation-protectedbonds

Europegovt.bonds(FX-hedged)INRlocalcurrencybonds

USAgencyMBS

FXviews

BullishbiasonUSD

GlobalMarketOutlook2

Fig.1HighUSandIndianequitymarketvaluationsarguablyjustifiedbyhighreturnonequity

12mforwardPrice/Bookvs.returnonequity

Source:FactSet,StandardChartered

Formarkets,thispolicyshiftissignificantasitcreatestheconditionsforoursoft-landingviewtopanout.Pre-emptiveratecutsthathelpavoidasharp,recessionaryslowingofeconomicgrowtharelikelytosupportanextendedearningsgrowthcycle.TheseconditionsshouldresultinequitiescontinuingtooutperformbondsandcashinH224.

USandIndianequitiestolead

Regionally,webelieveUSequitiesofferastrongcaseforcontinuedoutperformancerelativetoothermajorequitymarketsinH2.USearningsremainacornerstoneofourview–12-monthexpectedearningsgrowthremainsrobustandhasbeenrevisedhighersincethestartoftheyear.Moresignificantly,theseexpectationsshowgainsbroadeningbeyondthe‘Magnificent7’stocksbyyear-end.

USvaluationsareundoubtedlyhighandhavebeenonekeypushbackagainstourpositiveview.However,webelievethesearejustifiedbyahighreturnonequity(ROE).Inourview,thissuggestsvaluationsareunlikelytobeabarriertofurthergainsinanenvironmentwheremarketsremainfocusedongrowthassetsamidlikelyupcomingFedratecuts.

After14.8%gainsYTD,though,wewouldbalanceourpositiveviewgiventhatfurthergainsareunlikelytooccurinastraightline.Whileourshort-termquantitativeandtechnicalmodelsarenotflashinganywarningsigns,fundmanagersurveysnotequitelowlevelsofcash,whichhistoricallyhavebeenanindicatorofshort-termreversals.HistoryalsoshowsthereisariskofvolatilityintheweeksaroundUSelections.Whilebothareshort-termfactors,theywarnofgreatervolatilityinH2thanwhatmarketsexperiencedinH1.

BeyondtheUS,wehaveacoreholding(Neutral)viewonmostothermajormarkets.WehaveupgradedEuroareaequitiestocoreholdingamidasurpriseimprovementinhighfrequencygrowthdata,politicaluncertaintiesnotwithstanding.WealsonowseeJapanasacoreholding(Neutral)asthepositivecase(sharebuybacks,shareholder-friendlyreform,andhighernominalgrowth)runsupagainstanextendednegativesignalfromourshort-termtechnicalmodel.WeareUnderweightUKequitiesamidlowearningsexpectations.

Fig.2BondyieldshavehistoricallyfallennearoraheadofFedratecuts

10yrUSgovt.bondyieldvs.Fedpolicyrate

Source:Bloomberg,StandardChartered

InAsiaex-Japan,weareOverweightIndianequities.ThebasisisnotdissimilartothatofUSmarkets–theeconomicandearningsgrowthoutlookremainspositiveandthecompletionofelectionsputsakeyeventriskbehindus.Valuationsarechallenging,butwenoteIndianequitymarketsranksecondhighest,aftertheUS,amongmajorequitymarketsintermsofROE.Ourrelativepreferenceforlarge-capequitiesalsohelpsmitigatethisrisk,inourassessment.

Wehaveacoreholding(Neutral)viewonChineseequities.Positioningandvaluationssuggesttheeasygainsarenowbehindusasbothhavemovedawayfromexcessivelynegativeextremes.Thisnowputstheonusonearningsgrowth,whichislikelytorequiregreaterpolicysupport.

Carry,thekeythemeinbondsandFX

‘Carry’,ortheyield,remainsthekeyopportunityinbondandFXmarkets.Itis,however,muchhardertofindvalue.Thisbalancecausesustohaveacoreholding(Neutral)viewonglobalbonds.

HistoryremindsusthatUSdollarbondyieldsgenerallypeaknotfarfromwhentheFedstopshikingratesandfallnearoraheadofFedratecuts.Whilethemagnitudeofthisdeclinevariesdependingonthesizeofratecuts,historystronglyarguesforlockingintoday’syield.Holdingacoreallocationtobondsisattractive,especiallyvs.holdingcash,wherereinvestmentriskisconsiderablyhigherasratecutsbringfutureyieldslower.Wehaveaneutralviewbetweengovernmentandcorporatebonds–whilethelatteroffersaslightlyhigheryield,yieldpremiumsovergovernmentbondsofferlittlevalue.

EMbondsofferpocketsofopportunityandrisk.WeareOverweightEMUSD-denominatedgovernmentbondsaswebelievetherelativelyhighyieldandbettervaluemeanitislikelytooutperformglobalbonds.Incontrast,weareUnderweightEMlocalcurrencybondsaswebelievetheyielddoesnotcompensatefortakingoncurrencyrisk.ManymajorEMsarealsounlikelytocutratesasdeeplyorrapidlyasDevelopedMarket(DM)centralbanks,limitingpricegainsinEMlocalcurrencybonds.

3GlobalMarketOutlook

Goldabrightspark

Goldhasbeenatop-performingassetclassinH124,rising14.4%YTD.Whatwefindmostinterestingishowthegoldrallycontinuestobedrivenbyatightdemand/supplybalanceratherthanfallingbondyields.Weseeroomforthistocontinuegivencentralbankdemandremainsstrong,whilethedirectionofyieldsturnsmoresupportiveamidratecuts.

Whilewecontinuetohaveacoreholding(Neutral)viewontheassetclass,H1hasbeenalessononwhyitisimportanttobuildandmaintainacoreholdingingoldwithinFoundationportfolios.

Opportunisticallocations:Afocusongrowth

IntheUS,ourequitysectorOverweightsarefocusedonthetechnologyandcommunicationservicessectors.Whilewelikethemfortheirearningsoutlooksandsensitivitytofallingbondyields,wealsolikethemforbeinggrowth-oriented.This,webelieve,fitswellwiththemacroandmarketsenvironmentweexpectforH224astheFedstartstocutratestomanageasoftlandingfortheUSeconomy.

InEurope,weareOverweightthetechnologyandhealthcaresectors.Webelievethismorebarbell-likeapproachisconsistentwiththeimprovementinthegrowthoutlook,while

HowimportantareUSelectionsformarket?

OnekeyeventinH224thatisfirmlyoninvestors’horizonsistheUSPresidentialelection.

Since1972,theS&P500has,onaverage,deliveredpositivereturnssixmonthsbeforeandafterelections,withanyvolatilitylimitedtotheweeksaroundtheelectionitself.

Today,thequestioniswhetherthepresenceofaFedratecuttingcyclechangesthisoutcometoanydegree.Ouranalysisillustratedinthechartshowsthat,historically,S&P500returnsweresignificantlyworsethanaveragearoundelectionswhentheFedwasalsocuttingrates.

Fig.3USequitiesgenerallyperformwellinthe6monthsbeforeandafteraUSelection

S&P500averageperformancearoundUSPresidential

electionsacrossscenarios

Source:Bloomberg,StandardChartered;Datasince1972

recognisingthistrendstillhassomedistancetogo,especiallywithelection-relateduncertaintyinFrance.

InChina,weareOverweightthetechnology,communicationservicesandconsumerdiscretionarysectors.Webelievethismorefocusedapproachonsector-specificfundamentalslooksincreasinglyattractiveastheeasygainsfrombroadermarketgainscometoanend,withpositioningandvaluationsbothnolongeratextremes.

WeaddanewequityBuyideaonJapanbanks.Withtheshort-termtechnicalsignalremainingweakforthebroaderJapanmarket,webelievethisideashouldoffermorefocusedexposuretoanundervaluedsectorexposedtoalonger-termrecoveryinJapan’seconomyandrisingnetinterestmarginsatbanks.WecloseourBuyideaonSouthKoreanequities,evenaswekeepourTaiwanBuyideaopen,totrimourexposuretothesemiconductorssub-sector(seetheequitysectionformoredetails).

Inbonds,weaddanewBuyideaonUSagencymortgage-backedsecurities.Webelievetherisk/rewardisattractivegiventherobustyield,quasi-sovereigncreditquality,containedmortgageprepaymentriskandthelikelihoodforyieldstomovelower(seethebondssectionformoredetails).

However,thisaverageappearstohavebeenheavilyinfluencedby2008,theonlyUSPresidentialelectioninourperiodofanalysisthatalsofellwithinaneconomicrecession.Excluding2008fromtheanalysissuggeststheimpactofwhetherweareinaratehikingorratecuttingcyclemakeslittlediscernibledifferencetomarketreturns.

Thebottom-line:TheUSPresidentialelectionislikelytodominatetheheadlines,butinvestorsshouldpaymoreattentiontomacroandmarketfundamentals.

Fig.4Equity,FXvolatilitylowerthanusualin2024comparedwithpreviouselectionyears

AverageH1andH2historical*realisedvolatilityandactualH124volatilityformajorUSassetsduringelectionyears

Source:Bloomberg,StandardChartered;*Datasince1948

GlobalMarketOutlook4

Foundationassetallocationmodels

TheFoundationandFoundation+modelsareallocationsthatyoucanuseasthestartingpointforbuildingadiversifiedinvestmentportfolio.TheFoundationmodelshowcasesasetofallocationsfocusingontraditionalassetclassesthatareaccessibletomostinvestors,whiletheFoundation+modelincludesallocationstoprivateassetsthatmaybeaccessibletoinvestorsinsomejurisdictions,butnotothers.

Fig.5Foundationassetallocationforamoderatelyaggressiveriskprofile

Fig.6Foundation+assetallocationforamoderatelyaggressiveriskprofile

Fig.7Multi-assetincomeallocationforamoderateriskprofile

5GlobalMarketOutlook

Foundation:Ourtacticalassetallocationviews

Fig.8PerformanceofourFoundationAllocations*

Source:Bloomberg,StandardChartered

*12-monthperformancedatafrom20June2023to20June2024,3-monthperformancefrom20March2024to20June2024,1-monthperformancefrom20May2024to20June2024.

Fig.9Opportunisticideasperformance

GlobalMarketOutlook6

Foundation:Multi-assetincomestrategies

AudreyGoh,CFA

Head,AssetAllocation

HannahChew

PortfolioStrategist

Keythemes

OurMulti-AssetIncome(MAI)modelallocationhasdelivered4.4%YTDreturn.Themodelbenefittedfromoptimismsurroundingriskassets,anddividendequitiesalsobenefittedfromabroadeningoftherallyintraditionalequities.DevelopedMarketHighYield(DMHY)andleveragedloansgainedfromastrongcorporateearningsseason,whileEMUSDgovernmentbondsbenefittedfromadeclineinUSgovernmentbondyields.

OurMAImodelnowyieldsc.5.8%,dippingbelowthe6%markforthefirsttimethisyear.Inrecentweeks,majorcentralbanks,includingtheSwissNationalBank(SNB)andtheEuropeanCentralBank(ECB),haveinitiatedtheirratecuttingcycle,whiletheFedhasguidedforoneratecutthisyear.WeexpecttheECBtodelivermoreratecutsthisyear(seethemacrosectionformoredetails),andtheFedtobemorecautiousinordernottoloosenfinancialconditionsprematurelywhileeconomicdataremainsresilient.Webelieveyieldlevelsareattractiveforincome-focusedinvestorstolockinthecurrenthighyieldonoffer.

Overthenext6-to-12months,the2024USelectionswillbecloselywatchedbymarkets.HistorysuggestsincomeassetstendtodeliverpositivereturnsduringUSelectionyears,regardlessofwhethertheFediscuttingorhikingrates.TheonlyexceptionswereREITsandEuropehighdividendequities,whichdeliverednegativereturnsinthe2020pandemicelectionyear.

Keychart

Yieldsremainhighandattractiveacrossmostincomeassets

Fig.10Yieldonofferstillhigh,althoughitisbeginningtocomeofffromthepeakin2023

Yieldtoworst/dividendyield(%)

Source:Bloomberg,StandardChartered

ContingentConvertibles(CoCos)arecomplexfinancialinstruments.(RefertoImportantInformationonpage31forfurtherdetails)

Fig.11Valuationgapbetweenincomeandgrowthequitiesstillmakesdividendstocksattractive

P/EdifferencebetweenMSCIACWIDividendEquityIndexandMSCIACWIGrowthIndex

Source:Bloomberg,StandardChartered.

7GlobalMarketOutlook

Balancedallocationtoequitiesandbonds

OurMAImodelhasreturned4.4%YTD.ThishaslargelybeenduetotheincreasedallocationstoequitiesearlierinApril,whichhasbenefittedfromabroadeningoftheequityrallybeyondtraditionalequities,particularlyinAIandtechnologysectors.DMHYandleveragedloansalsoaddedpositively,givenearningsgrowthremainsstrong.EMUSDgovernmentbondsalsosawgainsduetodecliningUSgovernmentbondyields.

WemaintainabalancedallocationbetweenfixedincomeandequitycomponentswithinMAI.Solidearningsgrowthshouldcontinuetounderpinupsideinequitymarketsandwebelievedividendequitieshaveroomtocatchuptotraditionalequitiesgivenastill-attractivevaluationdiscountrelativetogrowthstocks.Inthecaseofbonds,yieldsarehighandattractive,andwealsoexpectbondstobenefitfromimpendingratecutsbymajorcentralbanks.

WeanticipateperformanceinDMHYbondsandleveragedloanstoberoughlyaligned.DMHYbonds,bynatureoftheirbiggerallocation,havebeenastrongcontributortotheoverallMAIperformance,whileleveragedloans,duetotheirfloatingratenature,havebenefittedfrominterestratesremaininghigh.Givenourexpectationofaneconomicsoftlanding,webelievebothassetclassesareattractivegiventheirhighyieldsonoffer.Also,defaultrisks,whileclimbinggradually,arelikelytoremaincappedgiventhestrongearningsbackdrop.

Wecontinuetoprefersub-financialsoverDMHYbonds.

TheformerhasdeliveredbetterperformanceYTDandthespreadsarestillmodestlywide,givinguscomfortthatthereisscopeforcontinuedoutperformanceoverthenext6to12months.WealsoacknowledgethattheFrenchelectionsmightposesomeuncertaintyinmarkets,butweviewthisasatemporarychallenge,whichislikelytohavelimitedimpacttotheunderlyingfundamentalsoverthemediumterm.

Lastly,weremainneutralbetweendividendequitiesandcoveredcallswithintheequitybasket.Weexpectmultipletailwindsfordividendequitiesmovingforward,suchasanearningsgrowthrecoveryandavaluationcatch-uptothebroadequitymarkets.Coveredcallswillstillbeafavourablewaytogenerateadditionalincome,whilestillparticipatingbroadlyinanyequitymarketrally.

ImplicationsofUSelectionsonincomeassets

Inadditiontomonetarypolicyandeconomicdata,investorswillalsohavetograpplewiththeuncertaintiessurroundingtheUSelections.OuranalysiscoversthelastthreeUSelectionsduetotheshorterhistoryofavailabledataforincomeassets.Ineachofthoseelectionyears,Fedpolicydecisionsweredifferent.Andifhistoryisanyguide,investorscantakecomfortinthefactthatbothfixedincomeandequitieshadperformedwellregardlessofthechangeinmonetarypolicies.Ataglance,incomeassets

acrosstheboardhadrecordedpositiveannualisedreturnsduringthecalendaryearsofeachUSelection,withtheexceptionofglobalREITsandEuropehighdividendequitiesduringthe2020pandemicyear.Thatbeingsaid,the2020USelectionyear,whichsawtheFedcuttingby150bps,generallyhadpoorerreturnsrelativetotheearliertwoelectionyears.

Fig.12IncomeassetssawpositivereturnsduringthepastthreeUSelectionyears

Annualisedreturnsduringthecalendaryearsofthe2020,

2016and2012USelections

Source:Bloomberg,StandardChartered

Electionscaninduceuncertaintyintomarkets,butthekeyistoalsoconsiderothermarketfactorsthatcanpotentiallyimpactperformance.Forinstance,2020sawtheonsetofthepandemic,draggingtheeconomyintoatechnicalrecession.Bothfactorswereunrelatedtotheelectionsitself.

Reinvestingdividendsimperativefortotalreturns

Whilepoliticaleventscanposeshort-termvolatilityrisks,long-terminvestmentdecisionsarestillbettermadebasedonlong-termfundamentals.Incomestrategyisdesignedtoprovideinvestorswithaconsistentandstableincomestream.Ontopofthat,itoffersinvestorsanoptiontoconsiderreinvestingofdividendsthatwillsupportcapitalpreservationandwealthaccumulation.Inotherwords,toenhancetheimplementationoftheincomestrategy,investorscanconsiderharnessingthepowerofcompoundingovertimebyreinvestinganyunuseddividends.Ouranalysisonthehistoricalreturnsshowsthatreinvestingdividendscanleadtoasmuchasc.67%outperformanceascomparedtowhendividendsnotreinvested.

InourPerspectivessectiononpage10,wecomparebalancedandincomestrategies.

GlobalMarketOutlook8

Perspectivesonkeyclientquestions

AudreyGoh,CFA

Head,AssetAllocation

TayQiXiu

InvestmentStrategist

QHowtocraftadiversifiedportfolioforfinanciallongevity?

Investingisadeeplypersonaljourney,shapedbyeachindividual’sfinancialgoalsandrisktolerance.Inthequestforfinancialgains,manyinvestorsaredrawntohigh-incomestrategiesfortheirimmediatecashflow.Yet,thisfocusmaynotbeoptimalforlong-termgrowth.Incomeportfolios,richinbondsanddividendyieldingstocks,offerconsistentcashflowappreciatedbyretireesandthoseseekingstability.However,forinvestorsaimingtogrowtheirassets,havingabalancedallocation,whichincludesagoodamountofgrowthassets–suchasstocksthatmightnotpaymuchdividendsbuthavepotentialtosignificantlyincreaseinvalue–iscrucial.Inthispiece,weexplorethemeritsofbothstrategiesandtheoptimalincomelevelforasustainablelong-termwithdrawalrateforportfolios.

Understandingincomeportfolios

Incomeportfolios,typicallyheavyinbondsanddividend-yieldingstocks,areengineeredtodeliverasteadycashflow.Theyarepopularamongthoseneedingregularincome.Despitetheirappeal,traditionalincomeportfoliosoftentrailbehindtheirmorebalancedcounterparts,whichcombineincomegenerationwithgrowthpotential.Withoutsubstantialgrowth,theystruggletobeatinflationandmaintainpurchasingpower.Historicaldatasince2009showedthatabalancedstockandbondportfolio(Fig.13)handilyoutperformedanincomeportfoliofromatotalreturnsperspective,highlightingtheimportanceofincludinggrowthassetsintotheinvestmentmixtocapitaliseonmarketupswingsandcompoundwealthovertime.

Thehiddencostofnotreinvestingincome

Acriticalaspectoftenoverlookedbyincomeinvestorsisthelong-termimpactofnotreinvestingtheirincome.Whileincomeportfoliosprovideregularcashflows,theycansufferintermsofcompoundgrowthifdividendsandinterestsareregularlywithdrawninsteadofbeingreinvested.Thisfactorcansignificantlydiminishtheportfolio’spotentialtogrowovertime.Whileanincomeportfoliocaterstoimmediatefinancialneeds,investorsneedtoweightheopportunitycostofforgoingthepowerfuleffectsofcompounding,whichiscentraltolong-termwealthaccumulation.

Fig.13Totalreturnskeyforlong-termwealthaccumulation;forincomestrategies,reinvestingincomeisimperative.Notreinvestingincomewillresultinlowertotalreturnslong-term

Cumulativereturnsoftotalreturnandpricereturnofadiversifiedincomeallocation*vs.totalreturnsofabalancedallocation**(May2009toMay2024)

Source:Bloomberg,StandardChartered.*Incomeallocation:55%GlobalBonds,43%GlobalHighDividendEquities,2%Cash**Balancedallocation:55%GlobalEquities,35%GlobalBonds,5%Gold,5%Cash.

9GlobalMarketOutlook

Totalreturns:Akeymeasureofsuccess

Totalreturn,whichencompassesinterest,dividends,andcapitalgains,isanimportantmeasureoffinancialsuccess.Focusingsolelyonincomecanbemisleadingasitdoesnotconsiderthepotentialforlossesinassetvalue.Havingaholisticviewofportfolioperformance,consideringbothincomeandgrowth,whenevaluatingsuccessiskey.

Thisconceptoftotalreturnisnotonlycrucialforinvestmentperformancebutalsoforretirementplanning.Forexample,asinvestorsapproachretirement,thefocusoftenshiftsfromaccumulationtopreservationanddistributionofwealth.Inthisphase,understandingtheinterplaybetweentotalreturnsandwithdrawalstrategiesbecomesparamount.

Fig.14Balancedandequityinvestorshavegreateroddsofsuccesswitha4%withdrawalrate

Successrate*ofsimulatedportfoliowithvaryingwithdrawalrates

Source:Bloomberg,StandardChartered*Successrate:theproportionofsimulatedportfolioswithapositivevalueposta30-yearrollingretirementperiodsince1871.USassetsonly.

The4%rule:Aguide