2024: a smorgasbord of a year

As we near the end of 2024, I wanted to reflect on the past year and look ahead to 2025.

The past 12 months have been quite eventful in the UK, with the general election followed by a busy period for many of my clients, who were crystallising capital gains pre-budget.

The US election was seemingly too close to call before voters went to the polls, yet, in the end, Donald Trump secured a resounding victory, and markets responded positively. Many clients allocated to the US via mainstream and small-cap indices, as well as via an equally weighted approach – all strategies I alluded to in my year-end summary last year.

Looking back on it, one feature of this year has been the wide range of geographical, asset class and thematic narratives that drove the market. Let’s take a look at 2024’s veritable smorgasbord of themes.

Big in Japan

First off, Japan was interesting. It finally appeared on the radars of many investors amid very strong performance in the first six months of last year, overcoming a long-term behavioural bias against the region.

This year, investors in the country experienced a bumpy ride. On 5 August the Nikkei dropped 12%, the largest single-day drop since Black Monday. The reason for this year’s fall was an unwinding of the carry trade, and was best explained by my colleagues in asset allocation.

You could see these gyrations as either an opportunity or a crisis – I think the former!

Here for the duration

In fixed income it was again the year of duration. Although there were some rate cuts, they weren’t as aggressive as first predicted, with inflation still surprising on the upside. Indeed, in the UK, annual inflation rose 2.3% in October up from 1.7% the month before.

Worth remembering, though, that it had been as high as 11.1% in October 2022.

AI, robot

Artificial intelligence (AI) continued to impress, and this year I had the privilege of hosting a small lunch with Professor Wyatt Newman, who covered such diverse topics as the wiring of a fruit fly brain to the advanced technology powering humanoid robots.

In February, we invited clients to a logistics company in the Midlands, where we saw how AI and robots work effectively 365 days a year.

The property ladder

Property was still a dilemma for many, with some clients burned by specialist funds, and unsure on where and how the asset class sat in portfolios. Yet, with positive forecasts next year, and the Labour government undertaking investments for affordable housing, there is more interest in real estate.

In November, we took clients to see a hotel that is held in our property portfolio, which was a gentle reminder that there is a wide range of investments to choose from in this space.

A little privacy, please

Private markets have been discussed by some clients, and in the wholesale market the chat is around liquidity, accessibility on platforms and cost.

It will be interesting to see how long-term asset funds (LTAFs) land with clients; they’re a new concept yet could provide a solution for investors with longer-term investment horizons to invest in illiquid assets while retaining access to their investment.

What’s in a name?

Another notable feature of 2024 was how well global brands performed. Many companies have been resilient, profitable and sustainable.

This further emphasised the importance of either being a great stock picker or investing via an ETF or fund that gives clients access to the theme.

All that glistens…

Gold mining and physical gold also packed a punch this year, primarily as a diversifier as central banks and clients hedged against economic uncertainty.

I think what surprised me most this year was that there are still some contrarian views by some clients, which is refreshing. So, whereas some asset classes were dismissed, they were embraced by others.

Here’s to 2025

So, what is at the forefront of clients’ minds as we approach 2025? Geopolitics is bound to be up there, with the Russia/Ukraine war entering its fourth year in February, and tensions in the Middle East still a concern. The growth outlook for the US is very much unknown. Markets initially seemed comfortable, yet there are murmurings of inflation.

As we head into 2025, I aim to have a positive mindset. As those who know me will be aware, I like acronyms, and I recently saw some amazing ones I wanted to share:

·         FAIL: first attempt in learning

·         END: effort never dies – surely the best summary of 2024. And for clients that say

·         NO: well, that clearly means, next opportunity!

For now, it’s time to replace the worn-out shoes, and enjoy the Christmas break – and look forward to another exciting year in the world of asset management!