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2023 was perhaps proof that pessimism makes headlines, whilst optimism makes money.

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SUMMARY

o 2023 Review - Page 3

Developed economies in the west benefitted from disinflation, robust labour markets, and continued upside surprises to consumption. The arrival of Large Language Models (LLM) boosted AI to the top of every CEO’s to-do-list, and the ‘Magnificent 7’ benefitted from FOMO as every investor and his dog seemed to be chasing the new narrative. Most investors however misjudged the multiplier effects from fiscal policy and the benefits this brings from a liquidity perspective. The cherry on the cake was the long-awaited and much anticipated Fed-Pivot. What a year it was!

o Outlook - Page 8

Despite strong labour market and consumption data, we continue to see more downside risks than upside surprise potential from a consumption perspective. That said, from an investment perspective, the opportunity set is as attractive as it has been in years. We see significant value in US treasuries, locking in real yields not seen in a long time. Emerging market equities offer attractive asymmetry, whilst our long-term thematic exposure underpinned by secular changes in society continues to offer exciting opportunities. Finally, we remain very bullish on the intersection of managed futures and ETFs, which both play a key role in our portfolios.

o Consumption - Page 10

The US consumer has been the backbone of market strength over the last year. However, given the cost-of-debt, dwindling excess savings and the resumption of student loan payments, the outlook is deteriorating faster than investors believe.

o Growth - Page 14

Developed economies have defied expectations – and fears of secular stagnation, a hard landing and recession – and sentiment continues to improve. We note however the long and variable lags that monetary policy inevitably have on prices, and the importance of prices in economic growth often being misunderstood. Whilst the probability of the ‘soft-landing’ narrative remains achievable, sustained drivers of demand looks to be waning at the same time as geopolitics and macroeconomic uncertainty looks set to rise. Alongside risks to consumption, we believe downside risks to economic growth remain significant.

o Inflation - Page 17

Cost-push inflation is a transitory factor. It is an outcome of fiscal and monetary excesses, often caused by policy decisions. To be clear, the significant rise in the cost of living during this cycle has been a direct consequence of massive fiscal stimulus via transfer payments along with central banks’ dramatic balance sheet expansion. We have not created or increased structural demand drivers and secular deflation continues to be the primary risk on the horizon.

o Liquidity - Page 19

Many investors misjudged the benefits and liquidity boost resulting from fiscal policy decisions and the slowdown in balance sheet contraction in major economies globally. These trends are set to continue as we enter an election year for the ages. At the same time, tightening monetary policy has peaked and the marginal change will likely further support much needed market liquidity, and indeed, borrowing costs. The canary in the coalmine might be rising term-premia!

o Secular Themes - Page 22

In many ways we are entering a ‘new roaring-20’s’. The arrival of Artificial Intelligence and the convergence of AI, digitalization, and healthcare represent one of the most exciting advancements we've ever witnessed. Indeed, we believe innovation is accelerating and the resulting investment opportunities will continue to increase. In this section, we lay out our investment themes and a brief thesis.