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Fourth Quarter 2024: Investment Strategy Update
By: Tom Toth, Wilshire
Wilshire's Fourth Quarter 2024 Investment Strategy Update summarizes our views on the markets and economy, and our current strategy views across asset classes.

This is an excerpt from NCPERS Fall 2024 issue of PERSist.Wilshire's Fourth Quarter 2024 Investment Strategy Update summarizes our views on the markets and economy, and our current strategy views across asset classes.

We believe that growth and particularly inflation are beginning to indicate signs of weaker demand. Equity and credit valuations remain expensive, particularly given optimistic earnings expectations, elevated short-term interest rates, and excessively positive investor sentiment.
The U.S. consumer is exhibiting signs of exhaustion, as the lagging impacts of very tight monetary policy, despite the recent and forecasted declines in interest rates, begin to weigh on trends in consumer spending. This is likely also to impact the ability of borrowers to meet their debt obligations across various segments of the economy, while stress in pockets of the financial system remain.
This continued uncertainty warrants judicious awareness to, and management of, absolute and active risks, resulting in the following implications for client portfolios:
- Underweight to corporate credit versus government bonds, with a continued preference for investment-grade credit relative to high yield.
- Maintaining our underweight in equities, while continuing to favor low volatility equities in an effort to facilitate some defensive exposure. We are now complementing this with a tilt towards small caps vs. large caps, as small caps are likely to experience the most relief due to a decline in interest rates and currently exhibit relatively less expensive valuations.

Wilshire is a leading global financial services firm and trusted partner to a diverse range of approximately 500 leading institutional investors and financial intermediaries. Our clients rely on us to improve investment outcomes for a better future. Wilshire advises on over $1.4 trillion in assets and manages $121 billion in assets as of June 30, 2024. Wilshire is headquartered in the United States with offices worldwide.
Bios: Tom Toth is a Managing Director providing client service for a variety of pension, endowment and foundation clients at Wilshire. He is a member of Wilshire's Investment Strategy Committee.
Tom joined the firm in 2004 and initially worked in the investment research group, where he wrote white papers on topics including hedge funds, private equity and infrastructure. Before joining the firm, he worked in New York for fixed income asset manager Fischer Francis Trees and Watts.
Tom earned his bachelor's degree from the University of California, San Diego and holds an MBA with a concentration in finance/capital markets from the USC Marshall School of Business. Tom also holds the Chartered Financial Analyst designation.
Disclosures: This material is intended for informational purposes only and should not be construed as legal, accounting, tax, investment, or other professional advice. This material contains proprietary information of Wilshire. It may not be disclosed, reproduced, or otherwise distributed, in whole or in part, to any other person or entity without prior written permission from Wilshire.
This information is provided to discuss general market activity, industry or sector trends, or other broad-based economic, market or political conditions. Economic and market forecasts presented herein reflect our judgment as of the date of this presentation and are subject to change without notice. These forecasts are subject to high levels of uncertainty that may affect actual performance. Accordingly, these forecasts should be viewed as merely representative of a broad range of possible outcomes. These forecasts are estimated, based on assumptions, and are subject to significant revision and may change materially as economic and market conditions change. Any references to indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only.
This material may include estimates, projections, assumptions and other "forward-looking statements." Forward-looking statements represent Wilshire's current beliefs and opinions in respect of potential future events. These statements are not guarantees of future performance and undue reliance should not be placed on them. Wilshire undertakes no obligation to update or revise any forward-looking statements.
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