To date, 2024 has provided strong performance across most investment markets, with the exception of Global Bonds and Global Real Estate, which have been significantly impacted by international interest rate changes.

The following chart depicts calendar year to date asset class performance and includes the most recent quarter (to 30 June 2024):

Source: JP Morgan Asset Management: https://am.jpmorgan.com/gb/en/asset-management/adv/insights/market-insights/market-updates/monthly-market-review/

US based tech companies (particularly those with exposures to artificial intelligence) have provided strong results in 2024 (following on from a strong 2023), leading growth stocks to return 17.4% calendar year to date.

Outside of the US, growth stocks across Europe, Japan and the UK have not performed as strongly, with value stocks outperforming in these regions over the most recent quarter.

Markets in Asia (driven largely by Chinese and Taiwanese stock market increases due to government intervention and AI exposures respectively) have also performed well and have led to emerging market stocks outperforming developed market stocks over the last quarter.

European markets have been volatile in recent times, driven by the French election, whereas in the UK, improving confidence has seen the FTSE deliver a return of 3.7% over the most recent quarter.

While growth stocks have consistently performed well since 2023, this chart demonstrates that choosing last year’s winner will often end poorly.

• Had you seen the poor performance of Global REITS in 2020 (-10.4%) and decided not to invest in that asset class in 2021, you would have missed out on that year’s leading asset class – with a return of 32.6%.
  o If you then chose to invest following the strong results in 2021, you would have selected one of 2022’s worst performers, with a return of -23.7%.
•  Commodities had consistently strong years in 2021 and 2022 (being that year’s strongest performer), however, quickly became 2023’s weakest performing asset class (-7.9%).

The asset allocation ‘quilt’ demonstrates the trouble with picking the next winner or loser in investment markets; there really is no clear pattern. When so much of performance is driven by unpredictable global trends, government policy and market reactions to domestic or global events, accurately predicting these trends can be incredibly difficult, even for the most educated and skilled investor or economist.

There are many examples of such, and this reinforces the importance of creating an investment portfolio that is appropriately diversified – to make sure your portfolio has exposures to each of the key asset classes. As demonstrated, assets at the top of the chart one year could be at the bottom the next, and vice versa. Diversification works to ease such big shifts in the short-term. While this means you may not solely receive the biggest gain of each year, you also avoid the largest losses, and consistency of returns is what most investors are truly seeking to assist with their long-term wealth planning.