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Donal Coughlan |
The above performance chart illustrates how various asset classes performed in 2024. It shows the performance of some of our benchmark funds in each of the main asset classes.
Equities
It was a very strong year for equities – the MSCI World was up c. 26% in euro terms. This was a very encouraging outcome, especially following up on the near 20% gain in 2023.
It proved to be a year when all the stars aligned for equities, as central banks were able to cut interest rates (due to falling inflation), while at the same time economic growth (particularly in the US) remained resilient.
Unlike the 2023 rally, which for the most part was concentrated in a small number of stocks, 2024 was a more broadly based recovery, with the gains being more evenly distributed across the equity complex.
It was also a year when the returns from emerging market and smaller company equities improved, albeit they did not keep pace with the broader MSCI World.
Bonds
It was a mixed year for bonds in 2024. Having struggled in the first half of the year, we finally saw signs of positive performance momentum returning to bond markets in the second half of the year.
Bonds struggled in the first half (H1), as markets adjusted to the realisation that interest rates would fall at a slower pace than was expected at the beginning of the year. However, despite this recalibration in H1, we saw a more encouraging backdrop for bonds in H2. A more benign inflation environment allowed central banks to cut interest rates.
As was the case in 2023, corporate bonds continued to outperform their government counterparts in 2024.
Property
2024 was a year of stabilisation in commercial property returns. Challenges remained, particularly in the office sector. However, the worst appears to be behind this asset class, as lower interest rates and relatively attractive valuations provided support to commercial property fund prices. This was evidenced by this asset class plateauing in the second half of 2024.
Cash
Cash fund returns outperformed government bond returns in 2024; however, the yields on cash funds fell in the latter part of the year as the ECB commenced its rate cutting cycle.
Multi-Asset Funds
Multi-asset funds continued to benefit from the strong performance of equities. The bond and property elements of these funds performed relatively less well but were instrumental in reducing overall volatility.