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Q2 2024 Market Review – Market Overview


 

Markets

  • In Q2, U.S. equity markets continued the grind higher, driven by extreme concentration in several large cap growth names.
  • International developed markets lagged, and emerging markets staged a small comeback.

Inflation

  • Inflation continued to trend downwards yet remains higher than the Fed’s 2% target.

Rates

  • Rate cut expectations have come down significantly since the start of the year.
  • The Fed left rates unchanged, and the FOMC reduced its outlook to one rate cut in 2024.

 

Q2 2024 Market Review – U.S. Stocks, International Stocks and Fixed Income


 

U.S. Stocks

  • At the surface, U.S. stocks performed strongly during the quarter, on the back of strong earnings and momentum that started in 2023.
  • Large Cap Growth stocks continued to lead, outpacing other areas of the market for both the quarter and the 1-year period.
  • In Q2 we saw a significant divergence in performance between Large Growth and other size/style boxes, from Large Value to Small Growth & Value.

International Stocks

  • Developed international finished the quarter marginally down.
  • Emerging markets staged a bit of a comeback, rising 5% and bringing 1-year trailing performance back in line with developed markets.

Fixed Income

  • Fixed income returns were mixed across the board in Q2, with no standout performers in either direction.
  • Over the 1-year period, returns are solid, and markets are paying healthy yields.
  • We believe bonds still have a role in portfolios and may serve as a ballast to stocks.

 

Q2 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.
  • The same trends from Q1 persisted into Q2, with quality and momentum driving returns. Size and value factors (in isolation) continued to detract from portfolios.

International Factors

Performance Relative to International Markets

  • Internationally, the outsized factor performance we saw in Q1 was more muted in Q2. Momentum continued to climb higher, size continued its decline, and value reversed the trend.
  • While aggregate results hurt portfolios in the US, overall factor exposure in International has generally benefited portfolios over the past year.

 

Q2 2024 Market Review – Parting Thoughts


Our brains have a natural tendency to give higher weight to recent trends when making predictions about the future. This bias, particularly in today’s extremely concentrated market, can tempt us to deviate from two central pillars of our investment philosophy: taking a long-term approach and maintaining global diversification.

While the current trends of today may persist over the short term, we use history as a guide to manage portfolios that can stand the test of time.

Want to know how this compares to Q1? Click here to check out our review from last quarter.

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.

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