Q1 2024 Market Review – Market Overview
Each quarter, Collective Wealth Planning, with the help of our investment partner Geowealth, provides transparency and seeks to clearly communicate what is driving performance for portfolios. The GeoWealth investment team has put together the following commentary for Q1, 2024.
Markets
- In Q1, U.S. stocks gained 10%+, international developed markets ~6%, and Emerging markets lagged.
- Broad fixed-income investments were flat to slightly negative for the quarter.
Inflation
- Inflation continued to trend downwards yet remains higher than the Fed’s 2% target.
- Expectations indicate inflation will likely cool in 2024, perhaps not as fast as previously anticipated.
Rates
- The Fed left rates unchanged and the FOMC maintained its outlook for three rate cuts in 2024.
- Yields generally rose modestly during the quarter, with bond prices dropping slightly.
Q1 2024 Market Review – U.S. Stocks, International Stocks and Fixed Income
U.S. Stocks
- U.S. stocks performed strongly during the quarter, continuing the momentum of 2023.
- Large Cap Growth stocks continued to lead, outpacing other areas of the market for both the quarter and the last year.
- Performance is starting to widen out beyond the “Magnificent 7”
- REITs continue to see headwinds due to their higher sensitivity to interest rates and uncertainty regarding demand.
International Stocks
- Developed international gained 5.8% and 15.3% for quarter and year, respectively.
- Emerging markets gained 2.4% and 8.2% for the quarter and year, respectively, while being weighed down by weaker-than-anticipated results in China.
Fixed Income
- Fixed income was flat to modestly negative for the quarter.
- Over the past year, hedged international bonds have shown the benefits of global diversification and outpaced the U.S. bond market.
- Within the U.S., more credit-sensitive sectors (like corporate bonds) generated higher returns over the past year.
- For investors in tax-sensitive portfolios, municipal bonds have broadly outpaced taxable bonds, with even stronger relative results when compared on an after-tax basis.
Q1 2024 Market Review – Factors
U.S. Factors
Performance Relative to the U.S. Market
- This graph highlights the difference (or relative performance) between a given factor index and a broad market capitalization-weighted index.
- Of the major academically supported factors that we evaluate, results were mixed for the quarter and the year. Exposure to quality and momentum have benefitted portfolios, while the size and value factors (in isolation) have been detractors from results over the last year.
International Factors
Performance Relative to International Markets
- Internationally, the performance for these factors was stronger than in the U.S. Momentum was the primary area of strength for the quarter, with other factors slightly detracting.
- Momentum and value contributed to portfolios for the year, while quality and size exposures detracted.
- Aggregate results benefitted portfolios for both the quarter and the last year.
Q1 2024 Market Review – Parting Thoughts
A long-term investment approach and global diversification are two of the central tenants to our investment philosophy. While recent trends and headlines often influence our mentality and perspective on the markets, it is critical to take a step back and recognize that markets often move in cycles. While predicting the direction of the markets over the short term has proven to be a futile task, we can use history as a guide to likely probabilities as we move forward.
International and U.S. stocks have historically traded leadership over time. While the U.S. has led for an extended period recently, it is unlikely to always be the best performing markets.
Many major indices (S&P 500, Nasdaq, Dow Jones) hit all-time highs during the quarter. While all-time highs in the markets can often result in investors wondering if they have missed the market gains and considering trying to wait for a pullback to put money to work, the data shows that is unlikely to be a successful strategy. In fact, according to data from J.P. Morgan, investors have historically been just as well off (or sometimes better) by putting money to work at high all-time highs vs other days.
Each quarter, Collective Wealth Planning, with the help of our investment partner Geowealth, provides transparency and seek to clearly communicate what is driving performance for portfolios. However, as long-term investors we believe it is important to note that any single period (especially a period as short as a quarter) can be skewed or limited in informational value and stress the importance of the longer-term perspective on portfolio positions.
The information contained herein does not constitute investment advice or a solicitation by Collective Wealth Planning or GeoWealth Management, LLC. Investments are not guaranteed and are subject to investment risk, including possible loss of the principal amount invested. Past performance is no guarantee of future results. Information obtained from third parties is believed to be accurate but has not been independently verified.
