Last October things looked pretty gloomy. With the exception of our Investment Grade Bond Fund, all our other funds were losing money for 2023 and EVE (our Ethical Value Fund) and Global (our Global (ex-UK) Equity Income Fund) were down -8.23% and -9.26% respectively.
I wasn’t gloomy, quite the reverse. I can’t say I was looking forward to presenting those results at our December Annual Client Seminars, but I was excited by the prospects of decent long-term returns for companies outside of the horrendously overpriced large US tech companies. It seems I was not the only optimist in the room because prices rallied through November and December and we finished the year with all Courtiers funds delivering positive returns for the year.
There are lots of excellent opportunities for investors that can take a long-term view. The UK seems particularly cheap with British businesses trading at very low multiples of earnings compared to their overseas, and particularly US, counterparts. An article in the Sunday Times of 7th January suggested that overseas investors will look to the UK as offering lots of bargains and lists a number of companies that could be targeted. Around the world, ‘value’ businesses still look ludicrously cheap compared to the ever-popular large US tech firms. The difference between the average earnings yield from companies held in our Global (ex-UK) Equity Income Fund and the MSCI World Index is the highest it’s been since we launched the fund back in 2015.
Of course, there are lots of things that will worry markets in 2024: the conflicts in Ukraine and the Middle East, tensions between the US and China, and elections on both sides of the Atlantic to name but a few. Sophocles once said, “to him who is in fear everything rustles”. The person that becomes darkly pessimistic will miss opportunities, and the global economy, with the introduction of AI, the move towards greener energy and a pick-up in productivity, is offering plenty of these at present.
I doubt 2024 will be an easy ride – in fact I can’t remember any year in which we’ve had one of these – but valuations of these levels and a ‘normalisation’ of interest rates should give the long-term investor plenty of cause for optimism for the next decade.
Happy New Year!
