In a briefing to various media outlets, BlackRock predicts that active investing strategies will dominate in 2024, with quality companies doing particularly well, according to an article in Barron’s. However, growth will be weaker, interest rates will still be high, and inflation will persist, says the firm’s global chief investment strategist Wei Li. While there will be risks in next year’s market, opportunities for rewards will abound, especially for active stockpickers. Investors will have “to steer portfolio outcomes more deliberately in grabbing the wheel,” says the head of the BlackRock Investment Institute, Jean Boivin.

While active management doesn’t have a great track record of being successful, BlackRock’s Tony DeSpirito says that he is “really excited” given “the opportunity for alpha [outperformance]” that will arise next year. Last year, the market was focused on energy; this year, technology ruled the roost. The market is “ever-changing,” says DeSpirito, making it an ideal environment for active investing. However, investors need to be discerning in what stocks they pick; choosing quality companies is key, DeSpirito asserts, especially companies that are resilient, the article reports. Stockpickers will need to seek out companies that are have stable balance sheets, and not only have high gross margins and a good return on capital, but also steady gross margins and returns. Having those kinds of stocks in your portfolio will help “immunize you from higher rates,” DeSpirito says. Price is also important; there’s a broad spectrum of valuations in the current market, and investors need to be aware of what they’re paying.

Currently, BlackRock is sitting on $8.3 trillion in money-market funds, and being selective about where to put the money, given that the yield on cash is 5%. “Long-term parking in cash is the cardinal sin of portfolio construction…and actually cash tends to underperform equities and bonds over the long term especially during periods after peak rates,” Li said in the briefing, Barron’s reports.