Entering 2024, our market outlook is cautiously optimistic, underpinned by a nuanced understanding of the global financial landscape. In the U.S., the enduring strength of companies with substantial free cash flow (FCF) profitability continues to be a pivotal factor. Our strategy emphasizes discerning stock selection in the small and mid-cap sectors, where FCF quality serves as a critical marker of potential growth. Meanwhile, large-cap U.S. defensive stocks maintain their allure as a reliable refuge in an environment marked by persistent uncertainties.
Globally, the economic and stock market recovery is gaining traction, despite ongoing geopolitical tensions. In such a context, a company’s ability to generate robust free cash flow is more crucial than ever. Emerging markets, though lagging, present unique opportunities for active managers to demonstrate their skill in navigating these complex markets and potentially achieving superior returns.