The Meb Faber Show
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GMO's Catherine LeGraw - Capitalizing on Global Asset Allocation in 2024 | #531
Today's guest is Catherine LeGraw, a member of GMO’s Asset Allocation Team. In today’s episode, Catherine explains why this is “the best relative asset allocation opportunity we’ve seen in 35 years,” and “we are building portfolios with some of the highest forecasted relative and absolute returns we’ve ever seen.” She explains where she sees opportunity around the world today, why she’s excited about deep value and quality, and how she’s thinking about the Magnificent 7.
Key Points
- GMO identifies the current market as presenting the best relative asset allocation opportunity in 35 years, with potential to outperform passive 60/40 stock-bond portfolios by selecting the right asset classes and leaning into non-US stocks, value over growth stocks, and cheaper currencies.
- Deep value stocks, defined as the cheapest 20% of the market, are considered top decile cheap and a significant opportunity for investors, offering a more pronounced benefit when value investing outperforms.
- Emerging country debt is highlighted as an attractive fixed income option due to the higher credit spreads it offers, providing a potential for better returns compared to traditional government bonds and corporate credit.
Chapters
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Transcript
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