Market update: First quarter 2024

The past quarter was an eventful quarter for the financial markets. The general optimism in the market has caused stocks to rise to unprecedented heights. Bonds, however, have experienced challenging months, partly due to persistent inflation figures.

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Review of the first quarter of 2024: market optimism despite persistent inflation.

The fourth quarter of 2023 brought positive news with higher-than-expected economic growth in the US. This, combined with encouraging global signs of reviving economic growth, ensured that investors were optimistic at the start of 2024. This partly led the stock market to achieve historically high returns combined with low volatility. While the stock market experienced high peaks, the bond market stagnated. This is mainly due to the persistent inflation figures. As inflation is not falling, central banks have indicated that they will lower interest rates less than previously expected. This caused the returns on the bond market to stall. This mainly affected government bonds and corporate bonds from very creditworthy companies. This is because interest rates have a major influence on the return of these safe investments. Corporate bonds with more risk, also known as High Yield corporate bonds, performed better. This is because these investments also generate returns from the credit risk of less favourably rated companies.

Best fund performance in the first quarter of 2024:Northern Trust World Custom ESG Equity Index Fund + 11.43%

The past quarter brought a very positive investment return for equities. Bonds performed less well, with corporate bonds from highly-rated companies and government bonds performing particularly poorly. The equity portfolio as a whole showed a return of 10.2%.

Historically high peaks in the stock market, what does that mean for my portfolio?

The stock market performed exceptionally well last quarter. However, the market sentiment is that the stock market will decline again in the near future. According to Nobel Prize winner Robert Shiller, the prices of American stocks have increased more than the profit of the underlying companies. This can lead to a downward correction in the stock market. "When prices get too far ahead of profits, a correction will eventually come," he states. 

Should you act on this and adjust your portfolio, for example, by selling your shares? No! The Vive investment model ensures that your portfolio is optimally diversified for your risk level. This means that this kind of turbulence will have little effect across the entire range of your portfolio. Moreover, it is scientifically proven that it is almost impossible to time the market, which means trying to predict when the stock market will fall. There is a high chance that you will therefore miss out on returns if you do this.

Robert Shiller’s advice is: use cheap index funds to include the entire equity and bond market in your portfolio and hold onto them.

This aligns seamlessly with Vive's message. We will repeat it once more: do not let the market disturb your long-term goals. Vive's investment strategies take into account the risks that are acceptable for your plan. Check the app to see how you have set your acceptable risk level for your investment plans. Movements in financial markets are not a reason to adjust your risk. A change in your personal situation may be. 

If you adjust your acceptable risk level in such a way that your current investment portfolio needs to be adjusted as a result, Vive will automatically take care of this. And consistently sticking to your investment strategy with well-diversified portfolios is the key to long-term success. 

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