Market Commentary
Q4 2024
The US equity market continued to outperform other equity markets although European markets rose because of central bank rate cuts and strong performance in banking and utility sectors, Asian markets rose slightly in the period driven by China government economic stimulus and other emerging markets had mixed performance due to political uncertainty and currency fluctuations.
The Markets
The final quarter of 2024 was a period where the US equity market continued to perform robustly and the S&P500 index reached several all-time highs. There was a broadening out of its performance drivers via a subtle move away from the mega cap tech companies to smaller value orientated companies as investors sought diversification and were concerned with historically high company valuations.
Fixed income in the US delivered mixed performance as the Fed cut interest rates at the end of the Quarter and throughout, US Treasury yields remained high providing a good income stream. UK gilts performed faced headwinds as interest rate cuts were not delivered as quickly as expected and the UK economic outlook remains challenging.
There was mixed performance in commodities with energy performing well and stable performance in gold over the quarter and appreciation of property assets in the main geographic areas as interest rates remained stable or were reduced.
Overall, this was a quarter in which the global economy led by the US market grew at a slower rate than the previous quarters but again showed its robustness in the face of the geopolitical challenges.
IP Model Portfolios – Performance commentary and fund changes
During Q4 2024, the IP MPS continued to perform strongly throughout the range and every portfolio outperformed its benchmark with the overweight US and global equity strategic positions providing the main drivers.
Those portfolios with a higher risk rating performed the best but there was no specific style bias that proved significantly better than others.
At the Investment Committee meeting in Q4 2024, the members assessed the performance and strategic aims of all portfolios and decided to implement more tactical changes.
In the accumulation range, we made changes to our core multi asset managers by selling down holdings in BNY Mellon which had underperformed and introduced Columbia Threadneedle Universal funds which had outperformed their competitors and at a significantly cheaper price. This helped to reduce the overall portfolio costs across the range. Other changes were to introduce Blackrock Consensus funds and JPM Enhanced Index funds to further add global equity exposure at a cheaper price.
In the passive range, the only change was to the adventurous portfolio where 5% of the Vanguard Lifestrategy 100% equity fund was sold so that we could invest into the HSBC Global Strategy Adventurous fund.
Across the income range, yields across all portfolios fell since the previous quarter as the economic conditions changed, so changes were made to bring the yields above 5% where appropriate. This meant increasing weightings to the Schroders Maximiser funds which had delivered consistently high yields over the long term and replacing or reducing weights of those funds where their yield fell in the quarter. The strategic aim of providing a competitive regular yield is reinforced by these changes.
Martin Nelmes
Investment Director and Chairman of the Network Investment Committee
This document is aimed at Investment Professionals only and should not be relied upon by Private Investors. Our comments and opinion are intended as general information only and do not constitute advice or recommendation. Information is sourced directly from fund managers and websites. Therefore, this information is as current as is available at the time of production.
On-Line Partnership Group Limited (reg. no. 03936920) and its subsidiaries, The On-Line Partnership Limited (reg. no. 03926063) and the Whitechurch Network Limited (reg. no. 03663042) trade collectively as In Partnership. All three companies are registered in England and Wales. The On-Line Partnership Limited and the Whitechurch Network Limited are authorised and regulated by the Financial Conduct Authority. Registered Office: 50-56 North Street, Horsham, West Sussex, RH12 1RD.