Brandon Patterson

Brandon Patterson is an associate partner within Aon Investments. He serves as a consultant to a diverse group of institutional clients, including nonprofit organizations, public pension plans and corporate retirement plans. Brandon assists clients with all aspects of their investment programs, including asset allocation strategy, investment policy development, manager selection and performance evaluation.

Brandon also serves on Aon’s North America Inclusive Leadership Council to support its objective of improving Aon’s inclusion and diversity through recruitment, education, representation and promotion. He earned B.B.A. and M.S. degrees in finance from the University of Memphis. Brandon is also a CAIA charterholder.

CIO: What changes are you making to your asset allocation advice, given the current state of monetary policy, geopolitics and the impact of inflation and rising interest rates?

Patterson: Given the current market environment, we believe there are opportunities for institutional investors, such as nonprofit organizations and public funds, to shift their strategic asset allocation depending on their objectives. Higher bond yields have resulted in higher expected returns for fixed income over the long term (i.e., 10 years). Due to the higher expected return for fixed income, there is a lower expected equity risk premium relative to fixed income across public markets. Also, the current economic environment is suggesting that the Fed may be slower to decrease rates than previously expected. Because of higher bond yields and a lower equity risk premium, we believe there are opportunities for institutional investors to reduce risk while maintaining a similar expected return by shifting some of their public equity allocation to fixed income. While forward-looking risk and return assumptions are not the sole driver of investment advice, we believe the current market environment and its impact on capital market assumptions should be considered when evaluating institutional investors’ strategic asset allocations.

CIO: What issues do you expect to dominate financial decisionmaking and the economy in the next 18 months to three years?

Patterson: We believe geopolitics and inflation will impact financial decisionmaking and the economy in the next 18 months to three years. 2024 has been labeled the year of elections, with at least 60 countries holding elections. The results of these elections will influence fiscal and monetary policy decisions, as new leaders across the globe will enter office and set their agendas on government spending, taxation and interest rates, which may all impact the global economy. In addition to geopolitics, inflation will continue to dominate financial decisionmaking and the economy. Core inflation in the U.S., as measured by the Consumer Price Index, has gradually come down to 3.3% annually, as of June 2024, but remains above the Fed’s 2% inflation objective. Economic indicators, such as employment and inflation, will determine where interest rates will be in the next 18 months to three years.

CIO: What asset classes (specific securities or sectors) look good to you now? Why?

Patterson: We believe now is a good time to be a provider of liquidity. The change in interest rates and impact of the 2023 banking crisis have improved the relative attractiveness of private market opportunities. Types of private market opportunities include direct lending, asset-based finance and bank capital relief. While private credit opportunities are not conducive to short- and medium-term tilts, we believe these types of opportunities are attractive over the long term and now is a reasonable entry point for institutional investors. In addition to private credit, we like opportunities in liquid alternatives that exhibit low correlation to traditional risky assets such as public equities. We believe liquid alternatives can provide reasonable sources of return while adding diversification to the overall portfolio.

The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Information contained herein is for informational purposes only and should not be considered investment advice.