iShares Fall 2023 Investment Directions

• Interest rates are likely to remain higher for longer on the heels of better-than-expected growth.
• Fixed income remains our highest-conviction trade, although we see select opportunities in high-quality equities such as energy and industrials.
• We see potential upside in countries like Japan, Mexico, and India, which benefit from structural global events like deglobalization and nearshoring.

Our Fall 2023 Investment Directions couples our macroeconomic views and market positioning to unpack key themes across U.S. equities, fixed income, and international exposures. As detailed in our full report, our view is to take advantage of opportunities in fixed income and position against volatility in equities, while remaining invested.

Fixed income remains our firmest conviction. Consistent with our expectation for gradually slowing, but positive, economic growth, we think the time has come to move out in duration and into the ‘belly’ of the yield curve to take advantage of higher rates at the end of the Federal Reserve hiking cycle.

This type of environment – where event risk premia remain high and implied correlations are low – underscores our continued preference for identifying quality characteristics within equities. Based on our preference for quality, three equity sectors stand out: energy, industrials, and information technology.

We see three primary narratives driving international exposures until year end. Central bank policy divergence opens up potential opportunities in emerging markets; global growth expectations influence broad emerging market allocations; and structural trends bolster particular regions.

For more insights and to read about our rationale for the recommendations, download the full 2023 Fall Investment Directions.