With markets faltering towards the end of the year, Q4 was the first and only negative quarter of 2024 for the Courtiers Multi-Asset Funds, as the Cautious Risk Fund, the Balanced Risk Fund, and the Growth Fund returned -1.62%, -1.56%, and -1.89% respectively. However, the funds’ total returns for the year remained positive as they delivered +3.8%, +5.99%, and +7.89% respectively.
Meanwhile, the UK Equity Income returned -2.27% during the quarter and +11.23% for the year, the Global (ex-UK) Equity Income returned +2.15% in Q4 and +12.01% for the year and the Ethical Value Equity Fund returned -0.17% during the quarter and +9.16% in 2024. Finally, the Investment Grade Bond fund returned +0.79% in Q4 and +2.59% for the year.
The UK stock market experienced a disappointing second half of 2024 following a strong start to the year. While the FTSE 100 saw a minor decline of -0.18% in the final quarter, domestically focused mid- and small-cap companies struggled significantly. The FTSE 250 ex-IT fell by -2.41%, and the FTSE Small-Cap ex-IT dropped by -0.99% over the same period. This downturn coincided with the lead-up to the first Labour Budget. Although anticipated increases in Capital Gains Tax Rates and reductions in Pension Relief did not materialise, the UK stock market did not recover from the losses incurred in October.
In the US, the quarter was also dominated by the election outcome. The US stock market, as measured by the S&P 500, initially responded positively, but subsequently relinquished some of those gains in recent weeks—ironically, since the former president’s appearance at the New York Stock Exchange. The S&P 500 finished Q4 up +2.4%.
European markets initially showed a positive reaction to the US election results. However, after digesting what a second Trump presidency might entail, particularly concerns about tariffs, the Eurostoxx 50 fell -1.75% over the quarter. Japan, after a turbulent Q3, saw steady growth throughout the quarter, finishing up +5.43%.
The election result has accelerated the flow of capital into the US, pushing the dollar higher. The US dollar strengthened significantly during the quarter, rising +7.05% against the pound, +7.72% against the euro, and +9.96% against the yen.
A stronger dollar often negatively impacts emerging markets, and this quarter was no exception. The MSCI Emerging Markets Index fell -4.24% in the fourth quarter. This decline presented an opportunity to increase our emerging market exposure, and we purchased our first Chilean stock late in the quarter.
Government bond markets were among the biggest fallers in the final quarter of 2024. A surprise uptick in inflation, coupled with the budget, caused government bond yields to rise to their highest level in over a year. UK government bonds, as represented by the FTSE Gilts All Stocks index, fell -3.10%, while long-dated gilts (those with over 15 years to maturity) fell -7.15%.
Inflation rose for two consecutive months this quarter, a trend unseen since October 2022, though from a significantly lower level. Inflation peaked at 11.1% in October 2022, compared to the latest UK Consumer Prices Index figure of 2.6% year-on-year. This increase postponed further rate cuts by the Bank of England, which voted 6-3 to maintain steady rates at its December meeting.
Sterling-denominated corporate bonds, tracked by the Markit iBoxx Sterling Corporates index, performed better, falling only 0.83%, and in the high-yield market, the ICE Bank of America Sterling High Yield index rose 1.76%.
Despite the backdrop of rising inflation and their recent strong performance, precious metals experienced a downturn this quarter. Gold edged down slightly by -0.47%, while silver saw a more significant decline of -7.27%.
Brent Crude Oil rebounded from a decline of over 15% last quarter to rise 3.62% this quarter. Agricultural commodities, including wheat and corn, remained relatively flat in Q4, with a modest gain of 0.53%.
