No bears here: Why these 12 fund managers are running with the bulls in 2024

They say you should never run from a bear. And, strangely, nothing typifies this like investors' response to the macroeconomic hazards, rising geopolitical tensions, and the myriad of other risks that continue to face the market. 

Instead of running for the hills, investors have stood tall, bared their teeth, and scared off the non-believing permabears to push local and international bourses triumphantly higher. 

And now, with both the Reserve Bank of Australia and the Federal Reserve at or near the end of their interest rate hiking cycles, the experts are confident in their calls for an even better year ahead. 

Worried that your portfolio will continue to falter as the Magnificent Seven soar even higher? Fear not, my friend. The experts tip that this should broaden out to a wider rally in more sectors and stocks. 

Sick of small and microcap's continued underperformance? Worry no more, 2024 could see the reversal you have been praying for. 

In this video, 12 of Australia's brightest investment minds share why they are not shying away from markets in 2024, including why one market veteran believes that the ASX could be in for double-digit returns over the next decade. 

Our featured fund managers include (in order of appearance): 

• Chris Stott, 1851 Capital 

• Mary Manning, Alphinity Investment Management 

• Joel Fleming, Yarra Capital Management 

• Vihari Ross, Antipodes 

• Matthew Kidman, Centennial Asset Management 

• Dr Philipp Hofflin, Lazard Asset Management 

• Marc Whittaker, IML 

• Bob Desmond, Claremont Global

• Emma Fisher, Airlie Funds Management 

• Daniel Sullivan, Janus Henderson 

• Francyne Mu, Franklin Templeton 

• Matthew Haupt, Wilson Asset Management 

Note: The information provided is not intended to be a recommendation. Please do your own research and seek advice from a professional before making any investment decisions. Past performance is not a reliable indicator of future returns.

You can watch the video by clicking the player, listen to the podcast, or read an edited transcript below. These interviews were filmed on Tuesday, 12 December 2023.

Other ways to listen:

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• Podbean

Edited Transcript 

Ally Selby: Hello and welcome to Livewire's Outlook Series for 2024. I'm Ally Selby.

James Marlay: And I'm James Marlay. And whether you're a bull, a bear, a tortoise, or a hare, this video is for you.

Ally Selby: In this video, you'll be finding out whether 12 of the country's finest investors are feeling bullish or bearish for the year ahead so that you can navigate a new era of lower growth and higher rates.

James Marlay: Looking forward to 2024, are you bullish or bearish? And why?

Chris Stott: Bullish in 2024. As we go forward into the new year, we see the prospect of interest rate cuts in the latter stages of 2024. We expect we'll have a soft landing for the economy here in Australia. Earnings will be tough in the first half, but as we fast-forward to the end of the year, or the second half, we expect that the economy will start again to show signs of growth. And we know the share market moves six to nine months ahead of the economy. So we're bullish on the outlook for 2024.

Mary Manning: I'm feeling pretty bullish. I think the US is at or near the end of its interest rate hiking cycle. And typically, when interest rates are on hold or start going down, that will be positive for equity markets the next year. The second reason I'm feeling bullish is because there's been a very narrow breadth in market returns in 2023. And I think in 2024, that's going to broaden out. So you have more stocks, and more sectors participating in upside.

Joel Fleming: I'm bullish. Microcaps are the most inefficient part of the market and have been beaten up for a couple of years now. They cover the full spectrum of the economy - and this is the nursery of the next great trend, the next structural changes that are occurring. So it's always been a fantastic place to look for investments, but just given the backdrop of performance, I think the starting point is really strong into 2024.

Vihari Ross: I'm bullish on the stock picking coming into 2024, but I'm bearish just at the level of the benchmark. We saw in 2023, we saw the Magnificent Seven go up by 99%, but an equally weighted benchmark was only up by 6%. That's far less glamorous in terms of results. I think what you've seen is this real dispersion in value, which is the most expensive stocks, versus the cheapest stock. So, looking into 2024, pay heed to valuation. We think that value dispersion will compress. And some of those tailwinds that we had around liquidity this year will actually start to reverse as well. So, I'm really bullish about the performance of that value factor coming into 2024.

Vihari Ross, Antipodes

Matthew Kidman: I think I'm consensus. I'm very bullish. We've had a couple of hard years, with interest rates rising. Centennial operates mainly in small caps. So I look at the charts just to see what's possible and I think small caps could do 20-25% in the calendar year. The All Ordinaries or the ASX 200, the bigger caps, they've done a bit better. I think that's maybe a 10-15% range. So I think smalls will do better. They do better about once every three years or four years. We're going to get one this year in 2024. 

James Marlay: Time in the sun. 

Matthew Kidman: Yep. 

Ally Selby: You've worked in markets for nearly three decades. You've obviously got a strong view of where the market could be going from that experience. Are you feeling bullish or bearish for the year ahead?

Dr. Philipp Hofflin: I think I've learned something over those 30 years, and that is that what I feel about the market isn't a very good guide. But I can tell you one thing though. If you look at valuations, which is what we really focus on, the market is actually very reasonably priced. Now, the market today is basically flat on the peak in 2007, 16 years ago. It's down 30% in real terms. So, back then, the market was expensive. Today, I think it's priced for double-digit returns for the next decade.

Dr Philipp Hofflin, Lazard Asset Management

Marc Whittaker: We're super excited about the opportunities available in the small-cap industrial space. The relative valuation between small caps and large caps is as wide as it's ever been. And we're finding some really good examples of what we think are high-quality industrials in that small-cap space. So the likes of ARN Media (ASX: A1N), GUD Holdings (ASX: GUD), and SG Fleet (ASX: SGF) are on single-digit to low double-digit PEs, with 5% plus dividend yields fully franked. We think that's really exciting.

Bob Desmond: We're probably sitting in the middle of the pack. I know that sounds a bit boring, Jimmy, but when I look at the portfolio, valuations are trading in line with their long-term averages. There've been extremes in the market the last few years where investors were pretty bearish in 2021, and then a very positive end to last year. We'd go by valuations. And we'd say valuations are fair at the moment.

Emma Fisher: I should probably disclose my biases upfront. I'm usually bullish. It could be a nuclear Armageddon, and I'd probably be saying, "I think there's some green shoots." I would say I'm feeling optimistic. You look at the settings - valuations don't look stretched and balance sheets look good. I think in any given year, the thing that you can always bet on is that markets are going to be emotional and irrational at some point, because they're made of people, and people are emotional and irrational. So I think just like any year, there'll be good chances to buy good businesses at good prices.

Daniel Sullivan: We feel quite bullish. It has been a consolidating year. So returns are roughly flat, but global equities are up about 20%. So it's a lagging year. It's a reverse of what happened the year prior, but we're quite optimistic going forward. Commodities have been consolidating as well. So, the general commodity index is down about 10%. We think that sets up for a good return going forward. A lot of disruption in commodity production has occurred, and those markets are tightening up. So we think we'll get good support from commodities. And the companies themselves are all positioning themselves to grow and be more efficient at what they do.

Francyne Mu: On balance I'm bullish. Obviously, in 2023, we've had many different curveballs, whether or not it's geopolitical risk, huge hikes in interest rates, and we've had a real concentration in terms of the rally centred on mega-cap names. So, I'm fairly bullish that we'll start to see this trickle down into more mid-cap names for 2024. And hoping for a more normal start to the next year.

Ally Selby: So bullish for small to mid-caps. Not so bullish for larger cap names that have already rallied?

Francyne Mu: Bullish for stocks in general. I think some of the larger mega-cap names have run a lot this year. And we should see some of that trickle down as investors search for growth and position themselves for the next year.

Matthew Haupt: Am I bullish or bearish? I think the year is going to be a battle of the giants in the investment return fields, which are liquidity, rates, and growth. So we're going to have moments of bullishness and moments of bearishness, as all those three factors fight each other. It's going to be a very interesting year ahead in 2024. Normally, you'd have one factor dominating, but it's going to be a fight between the three factors. So it's going to be a very, very interesting year.

James Marlay: And if you had to back one animal, which would it be? The bull or the bear

Matthew Haupt: I think eventually the bull will win, but it's going to be a very big battle throughout the year. 

James Marlay: Could go a few rounds.

Matthew Haupt: Exactly. It's going to be a long, long year.

This article was originally published on Livewire Markets.