Markets had a mixed start to the year (1 April 2023), initially expecting tough trading conditions to continue based on a backdrop of rising interest rates and weakening economic growth. But as the year progressed, we saw a turnaround, and by the end of the year (31 March 2024) we had seen strong growth across most asset classes and funds. Market momentum started to shift from late October, as inflation began to show signs of coming under control and enthusiasm about growth opportunities increased. The US economy played its part with many seeing it in “goldilocks” terms (not too hot or too cold), with consumer spending, employment, and company earnings holding up well. Both bond and equity markets rallied in the second half of the year, with global shares marking one of their best periods for several years. However, the question remains, was this all too far too fast?

A massive part of the performance of global equities during the year was due to the domination of the mega-cap technology stocks. A select band of just seven stocks was responsible for two-thirds of the Standard and Poor’s 500 performance in 2023, but the positive market performance spread more broadly at the start of 2024. Markets delivered strong results for the year with all asset classes having a positive return. The major contributor was international equities, which rose around the mid-twenty percent mark over the year. International and domestic fixed interest returns bounced back from weakness in recent years.

Holding a mixture of complementary assets, managers, and strategies gives us confidence to navigate an uncertain future and helps smooth out the volatility of returns. It’s hard to see global equities repeating this year’s stellar outcome, but investors need to consider their performance on a long-term diversified basis, accepting that there will be good years and bad years throughout the investment journey.