Investors will face a number of uncertainties in 2024, including the question of whether a recession will be avoided or how geopolitical risks will develop. Stocks have been rallying this year, while bonds fell into a bear market — before investors recently started flocking back to this asset. Against that backdrop, cautious investors may want to create a diversified portfolio as they head into 2024. Three experts shared their market outlooks and investment strategies for 2024, including how to create a diversified portfolio of stocks and bonds. The three — who were at the Asia campus of INSEAD in Singapore in November for the first CNBC Pro Talks organized at a business school — are Brian Arcese, portfolio manager at Foord Asset Management, James Sullivan, managing director and head of Asia-Pacific equity research at JPMorgan, and Jenny Zeng, CIO of Asia-Pacific fixed income at Allianz Global Investors. Volatility and inflation Arcese said this is how he would allocate his portfolio for next year: 50% in stocks, 20% in fixed income, 6% to 8% in gold, and the remainder in cash. He said gold is “a good hedge against volatility and against geopolitical risks, and overtime we’ll see geopolitical risks increasing, I don’t mean 2024 but over the long term.” Of his equities, around 15% to 20% are invested in commodity-linked stocks — that means “high quality” energy companies or copper miners, he told CNBC Pro Talks. Arcese said he picks commodity companies that generate a lot of cash. Though his base case is an economic slowdown next year, and though it may not make sense to invest heavily in commodities, he said he has to position for the fact that he could be wrong. Commodities usually do better in a good economy — and vice versa — as there are more activities and more types of commodities may be needed for manufacturing. Copper, for instance, is considered a barometer for the health of the world economy as it’s used in anything from consumer goods to industrial equipment. It also works for a situation where inflation continues to be high for longer than expected, he added. “Equities in general are a hedge against inflation over time, but commodity linked equities are obviously more of a real time hedge against inflation,” Arcese added. Diversification When it comes to fixed income, Asian bonds offer the best diversification, according to Zeng. She said the beta to U.S. Treasurys for local currency government bonds in Asia has “come down significantly.” “So if you really want to diversify you need to have the beta lower than your normal or your core portfolio right,” she said. Beta is a measure of the volatility or the risk of one asset class compared with another. The lower the beta of the particular security is, the less co-related it is to the other parts of the market. The yields of 2-year and 10-year U.S. Treasurys have steadily risen this year before falling in the past month. Still, they’re now higher than they were at the start of the year. Yields and prices move in opposite directions ‘Back to basics’ Sullivan of JPMorgan, meanwhile, is advocating a “return … back to basics.” Sectors in basic materials and those that benefit from demand in the electric vehicle and batteries space, are looking interesting, he said. “The old economy tilt to market performance in 2024 could catch people by surprise,” he said.