When looking at the allocations made by managers in the first half of 2024, one observation stands out: portfolios no longer resemble those of 2022. The reallocations between bonds, equities, and private assets have accelerated due to the combined effects of monetary policies, the rise of artificial intelligence, and a climate financing that is scaling up. Here are the key trends that have truly influenced investment decisions this year.
Global FDI Flows in 2024: A False Recovery
On the ground, UNCTAD’s figures set the tone. Global foreign direct investment (FDI) has only increased by about 1% in the first half of 2024, excluding European transit economies. These countries serve as transfer points before capital reaches its final destination, which skews the raw reading.
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Including these transit economies, the reported increase rises to 25%, a gap that highlights how analyzing FDI flows requires filtering raw figures. For a private investor or a small business manager in France, the practical conclusion remains the same: international capital is flowing, but not necessarily where one might expect it.
Funding for international projects has continued its downward trend, with a decrease of 30% in both number and value. New industrial projects have declined by 10%, and infrastructure projects by a third, weighed down by high financing costs and inflationary pressures. These movements are regularly tracked in the news on Aujourd’hui J’investis, where macro trends are put into perspective for French savers.
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Artificial Intelligence and Investment: The Geopolitical Divide That Markets Underestimate
AI is not just a hot stock market theme for technology shares. UNCTAD warns of a growing concentration of FDI and private capital flows in AI and digital infrastructure. The identified risk is explicit: widening the global development gap between countries capable of attracting these investments and others.
In practical terms, companies raising funds for AI-related projects are concentrated in a handful of geographic areas. For an investor based in Europe, this means that betting on AI through ETFs or thematic funds often equates to heavily exposing oneself to North American markets and a few Asian hubs.
What This Means for a Diversified Portfolio
The temptation to overweight AI is strong after recent performances. Returns vary on this point depending on investment horizons, but one thing is clear: geographic diversification remains a bulwark against sector concentration risk. Betting on AI without considering where the underlying assets are domiciled is as much a geopolitical bet as it is a technological one.
Climate Financing: Beyond the ESG Label, Massive and Structural Flows
Responsible investment is no longer a niche segment. The OECD documents that climate financing provided and mobilized by developed countries reached $132.8 billion in 2023, then $136.7 billion in 2024, sustainably exceeding the $100 billion target set under the Paris Agreement.
These amounts do not come solely from the public sector. Mixed flows (public-private) towards climate transition are becoming a structural pillar of global capital allocation. For accessible investments in France, this translates into a growing offer of labeled funds and green bond products.
- Sovereign and corporate green bonds are multiplying, offering yields comparable to traditional bonds with a directional flow of capital towards energy transition.
- The global sustainable finance market is expected to grow significantly according to Fortune Business Insights, attracting new managers and broadening choices for savers.
- In Canada, responsible investment now represents a considerable market share of assets under management, signaling that the movement far exceeds the European circle.
Bonds, Stocks, and Cash: Where to Place Capital at the End of the Cycle
The turnaround in monetary policy, anticipated for the end of the first half of 2024 by Amundi, has directed strategies towards bonds. The resurgence of bonds is not just a technical rebound: it reflects a regime change after years of low rates followed by rapid increases.
Cash: A Trap for Cautious Investors
Capital Group pointed out in early 2024 that cash is less attractive than one might think. Keeping cash in a savings account or money market fund provides visible returns, but erosion from inflation and the opportunity cost compared to equity or bond markets weigh on real performance in the medium term.
In equity markets, the S&P 500 had risen by over 26% in 2023, pushing valuations to high levels. Emerging markets, particularly Asia, have attracted investment flows due to superior economic resilience, even as fragmentation between geographic areas has increased.
- European stocks remain undervalued compared to American stocks, creating entry points for value-oriented equity investors.
- Private assets (private equity, private debt, infrastructure) continue to attract institutional investors, with six major trends identified by Natixis IM for 2024.
- The rebalancing between stocks, bonds, and real assets constitutes the structuring decision of the year for most allocators.
The year 2024 has not produced a crash or a spectacular bubble, but it has reshuffled the cards among asset classes. Flows towards AI and climate financing are shaping a new geography of investment, where France and Europe must actively position themselves to capture their share of capital. The most useful thing for a saver remains to ensure that their allocation reflects these underlying movements, not last month’s headlines.