Market headlines right now are focusing on, of course, the ongoing battle between inflation and interest rates. That said, it’s important for investors not to miss the potential impact of geopolitical risks in 2024.
Even if many of those risks don’t hit, like intense market fears regarding China’s political centralization in late 2022, that fear still has an impact. As such, investors should take note of potential risks at a minimum and consider active investing as one option to handle that volatility.
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Why active investing? Whether investors are looking for an active approach to international or domestic equities, active investing can limit the impact of geopolitical volatility. Active strategies bring to bear the experience of seasoned managers who not only have significant experience in their specific investing areas, but have also dealt with plenty of geopolitical risk in their careers already. New research from Charles Schwab offers an overview of risks to watch out for.
Elections as Geopolitical Risks in 2024
Starting off, investors may want to pay attention to elections next year. From the U.S. to Taiwan, major elections look set to impact not only the geopolitical situation around the world but also global markets. For example, a Taiwanese election will likely have a significant bearing on the U.S. relationship with China.
At the same time, a massive share of the world’s semiconductor industry operates in Taiwan, which adds to the urgency around elections on the island.
Will Inflation Linger or Even Rebound?
While inflation has come down significantly from this time last year in the U.S., inflation should not be scoffed at looking forward. Inflation has had a previous tendency to come in waves in the U.S. and other nations with significant consumer price index (CPI) data, like the U.K. and Canada.
While this inflationary period does not exactly reflect the waves of inflation in the 1970s, inflation could spike yet again. That could come from supply chain issues globally at choke points like the Red Sea, as seen in current headlines, with Houthi rebels impeding global trade up toward the Suez Canal. Broadly, however, the battle against inflation is not over, and investors should lean on active investing that can adjust if it spikes again.
Taken together, with investors revisiting their portfolios already, active investing should be in the conversation. Active investing provides one option to address geopolitical risk in 2024, which is available in ETFs like those at T. Rowe Price. The firm offers a wide range of strategies like the T. Rowe Price International Equity ETF (TOUS) and the T. Rowe Price Blue Chip Growth ETF (TCHP) that may appeal to investors looking for active strategies to ride out potential volatility next year.
For more news, information, and analysis, visit the Active ETF Channel.
