Wealth Management Insights – in brief
Welcome to 2024
We welcome you to the new investing year, one that is guaranteed to be eventful.? From a political perspective alone it will be fascinating, over 4.2bn people are eligible to head to the polls with 70 worldwide elections occurring making 2024 the biggest election year in history. (five-elections-in-2024-that-will-shape-the-global-order)
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We touch on the following topics in this edition:
Information only disclaimer.?The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any investment decision or taking any action. For information about Jarden’s financial advice service, please refer to our publicly available disclosure statement which is available here https://www.jarden.co.nz/our-services/wealth-management/financial-advice-provider-disclosure-statement/
Positive 2023 Market Returns
Global equity markets returned over 23% (in NZD terms) with the US equity market finishing just shy of an all-time high. Lower risk assets also joined the party; NZ bonds produced a +7.5% return.
The bulk of returns came in the last months of the year as faster than expected falls in inflation spurred hopes of central banks cutting policy interest rates in most major economies. In turn, this saw recession fears replaced with growing confidence that central banks will achieve their two percent inflation targets without tipping economies into recession.
The following chart shows asset class returns for the year.
For investors in a diversified portfolio, you should have experienced positive returns of a similar nature to those in the table below*
?Risk Profile
*note the above are index returns only, aligned with Jarden’s standard asset allocation models which may differ from other providers. ?Jarden also offers bespoke options, so clients individual returns may differ.
The “Magnificent Seven” drive US market returns
Equity returns were strong, but all is not equal in the share market.
A handful of stocks known as the “Magnificent Seven” (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla) delivered the bulk of US market returns in 2023. However pleasingly the rally broadened to the rest of the market in the December. This can be seen in the tech-dominated NASDAQ Index which gained +14.3% in the December quarter, closely followed by the broader S&P 500 Index’s gain of +11.2%.
The importance of recognising your investment time horizon
The strong 2023 investment performance was in stark contrast to the disappointing performance of 2022, thus underlining the need for patience and the need to generally take a longer-term view when investing.
The ‘Covid’ years have been a very difficult, and volatile, period for investors. However, it’s important to put this in the context of longer average annual returns, which remain very positive.
Wealth destruction can very easily occur in these volatile years, which is why we work hard with our clients to determine the correct timeframe for their investment strategy and support them on the journey. Sticking to the plan and remaining invested during the bad years is crucial; your plan should include the understanding that negative years are expected to occur from time to time.
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What do returns look like from here?? Calmer waters
Equites and property still provide superior forecast returns but, pleasingly, lower risk assets look set to provide much better returns for your portfolio than the last decade.
Looking to the next decade of average annual returns, how do they compare to the last decade? In the chart below we compare the last decade of average annual asset class returns (gold bars) with Jarden forecasts (Blue).
Wishing you the best for 2024 and all it brings.
Who are we?
We help clients manage their wealth; in addition to assisting private individuals and families, we have a particular interest in the NZ Charitable Sector, and both perform governance roles for nationwide not-for-profit organisations. Combined industry experience of over 35 years; 12 years as a team in the Jarden family.
We are privileged to have amazing clients and believe it is crucial to seek to work with those who have similar values. Openness and clear communication ensure a shared understanding of your goals and the best long-term wealth outcomes.