An unpredictable landscape sets the scene for substantial risks – and opportunities – for investors in 2024. Our investment heads set out their views on the year ahead across Australian value equities, Australian small companies, global emerging markets and global listed infrastructure.

In the context of the Australian small cap sector, we believe strong corporate governance via executive incentivisation and board composition is the most influential ESG factor driving shareholder returns.

We believe worries about the ‘Big Four’ banks are already baked into share prices. Modest valuations and choppy markets see us ready to take advantage of emerging pockets of longer-term value.

Despite potential for a softening labour market, we believe material wage inflation will come through over the next 6-12 months. Our research indicates this will significantly impact select sectors of the Australian small cap market, increasing our focus on companies with genuine pricing power.

Coming out of COVID, persistent demand and supply constraints in listed transportation infrastructure has highlighted the ability of these assets to shield investors from cost inflation and higher interest rates.

Higher rates are helping deflate stretched valuations for a number of high-profile Australian growth stocks. Pockets of value are emerging, but patience is key.

Conditions are challenging for most ASX-listed smaller miners. Cost pressures, project execution risk and geopolitics warrant a proven, consistent approach to stock selection.

We believe social factors are important indicators of management quality and long-term performance, with social themes such as safety and employee engagement flowing directly through to employee wellbeing, productivity and profitability.

‘Green’ hydrogen is currently viewed as a versatile energy carrier in a low-carbon future and a promising solution to displace the role of fossil fuels. With a focus on Europe, the team dissects the opportunities for – and limitations of – large-scale green hydrogen usage.