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Investment Outlook

Portfolio construction themes

Global Investment Committee
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We believe the advantages of remaining fully invested through an uncertain environment outweigh the risks of staying on the sidelines. To be sure, the backdrop is tricky. While inflation is slowly moderating, economic growth is slowing as well, and we can’t rule out the risk of a hard economic landing. Most markets are probably close to the end of policy tightening, but that doesn’t mean easing is on the near-term horizon. It may be tempting to allocate more to cash and wait for further clarity, but we think that would be a mistake. We believe investors should stay in the game and continue seeking opportunities for portfolio growth and income generation, even if that means looking in unexpected areas.

Asset class “heat map”

Our cross-asset class views indicate where we see the best relative opportunities within global financial markets. These are not intended to represent a specific portfolio, but rather to answer the question: “What are our highest-conviction views when it comes to putting new money to work?” These views assume a U.S. dollar-based investor seeking long-term growth and represent a one-year time horizon.

Asset class “heat map” 

Portfolio themes

Figure 1: Investors tend to accumulate cash at precisely the wrong times

Additional areas of focus

Across the equity spectrum: The public equity market has been propelled higher for much of 2023 by a handful of technology companies. While markets have broadened recently, we think broad public equity markets present a less-than-compelling risk/reward profile at current valuations. As we detail more fully in our equity “best ideas” discussion, solid opportunities exist in dividend-paying U.S. equities and select emerging markets, but overall we suggest a defensive, neutral stance.

Shifting to private equities, many clients are asking when conditions are likely to improve. Deal flow has remained depressed due to concerns around issues such as rising input costs and supply chain disruptions that have been impacting margins of private businesses. Bright spots are emerging in motivated/distressed sellers or in smaller, highly opportunistic deals, but we expect it will take a couple of quarters for the overall market to substantially improve.

Slowing economic growth and moderating inflation and interest rates mean cash returns are likely to decline from here.

Our highest-conviction views:

Private credit (+) remains a favored area. Investor demand is high and investment fundamentals look strong. We continue to prefer more resilient areas such as health care, software and insurance brokers that are relatively well-positioned to withstand economic downturns.

Infrastructure (+) should hold up relatively well amid prospects for slowing economic growth. Both public and private infrastructure look compelling, especially the attractive valuations within public infrastructure.

Municipals (+) should see ongoing tailwinds from high demand and solid fundamentals. The market’s relatively long duration profile also creates potential advantages in the shifting interest rate environment

All market and economic data from Bloomberg, FactSet and Morningstar.

The views and opinions expressed are for informational and educational purposes only as of the date of production/writing and may change without notice at any time based on numerous factors, such as market or other conditions, legal and regulatory developments, additional risks and uncertainties and may not come to pass. This material may contain “forward-looking” information that is not purely historical in nature.

Such information may include, among other things, projections, forecasts, estimates of market returns, and proposed or expected portfolio composition. Any changes to assumptions that may have been made in preparing this material could have a material impact on the information presented herein by way of example. Performance data shown represents past performance and does not predict or guarantee future results. Investing involves risk; principal loss is possible.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. For term definitions and index descriptions, please access the glossary on Please note, it is not possible to invest directly in an index.

Important information on risk
All investments carry a certain degree of risk and there is no assurance that an investment will provide positive performance over any period of time. Equity investing involves risk. Investments are also subject to political, currency and regulatory risks. These risks may be magnified in emerging markets. Diversification is a technique to help reduce risk. There is no guarantee that diversification will protect against a loss of income. Investing in municipal bonds involves risks such as interest rate risk, credit risk and market risk, including the possible loss of principal. The value of the portfolio will fluctuate based on the value of the underlying securities. There are special risks associated with investments in high yield bonds, hedging activities and the potential use of leverage. Portfolios that include lower rated municipal bonds, commonly referred to as “high yield” or “junk” bonds, which are considered to be speculative, the credit and investment risk is heightened for the portfolio. Credit ratings are subject to change. AAA, AA, A, and BBB are investment grade ratings; BB, B, CCC/CC/C and D are below-investment grade ratings. As an asset class, real assets are less developed, more illiquid, and less transparent compared to traditional asset classes. Investments will be subject to risks generally associated with the ownership of real estate-related assets and foreign investing, including changes in economic conditions, currency values, environmental risks, the cost of and ability to obtain insurance, and risks related to leasing of properties. Investors should be aware that alternative investments including private equity and private debt are speculative, subject to substantial risks including the risks associated with limited liquidity, the use of leverage, short sales and concentrated investments and may involve complex tax structures and investment strategies. Alternative investments may be illiquid, there may be no liquid secondary market or ready purchasers for such securities, they may not be required to provide periodic pricing or valuation information to investors, there may be delays in distributing tax information to investors, they are not subject to the same regulatory requirements as other types of pooled investment vehicles, and they may be subject to high fees and expenses, which will reduce profits. Alternative investments are not appropriate for all investors and should not constitute an entire investment program. Investors may lose all or substantially all of the capital invested. The historical returns achieved by alternative asset vehicles is not a prediction of future performance or a guarantee of future results, and there can be no assurance that comparable returns will be achieved by any strategy. Impact investing and/or Environmental, Social and Governance (ESG) managers may take into consideration factors beyond traditional financial information to select securities, which could result in relative investment performance deviating from other strategies or broad market benchmarks, depending on whether such sectors or investments are in or out of favor in the market.

Nuveen, LLC provides investment services through its investment specialists.

This information does not constitute investment research as defined under MiFID.

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