After technology drove the market in 2023, fund managers are looking at which sectors could see a resurgence in 2024.
Richard Saldanha, who has managed Aviva’s Global Income Fund for the past 10 years, said his team are looking at healthcare and consumer staples this year.
2023 was the year of the ‘Magnificent Seven’ which contributed considerably to US equities’ total return.
The seven technology stocks in question were Apple, Microsoft, Meta, Amazon, Alphabet, Nvidia and Tesla.
The wider emergence of AI drove this trend towards these companies.
Saldanha does not think the companies will stop being leading stocks but has turned his attention to where else could see growth in 2024.
He said: “Last year, in all the hype around AI, consumer staples and healthcare sectors were left behind.
“They actually still delivered but both sectors derated massively.
Saldanha added there could be uncertainty in the market in 2024 with voters across the globe heading to the polls and ongoing geopolitical risks.
“We actually think, given the backdrop, a focus on resilience might become more appealing for investors”, he said.
“These sectors have been highly prized in the past for offering resilience so let’s not forget about that.”
Though technology and the emergence of AI remains a key theme for 2024, Sardanha said fund managers are looking at other industries where AI could be a driver.
This shift to AI also opens up the opportunity for data centres to remain a robust investment, with more computing power needed.
Another area which Saldanha expects to be strong is investment in ageing grids which need to be strengthened up to support a switch to electrification and shift to renewable energy.
AI’s impact on the investment industry
As the industry deals with huge amounts of data, Saldanha believed AI could play a part in this aspect of the job.
He said: “We’ve got a myriad of information and what is important is the ability to zero in on what is important.
“I wouldn’t be surprised if AI continues to shape that.
“There is still a human element to what we do and there is always going to be a need for that - understanding how humans behave is a huge driver of markets.”
tara.o'connor@ft.com
What's your view?
Have your say in the comments section below or email us: ftadviser.newsdesk@ft.com.
