Q4 2024 Market Review and Current Performance
Executive Summary
- Strong Market Performance: The fourth quarter witnessed a significant equity rally, driven by the U.S. election outcome. The S&P 500 achieved a 25.0% annual return, building upon 2023's robust performance.
- Interest Rate Volatility: Interest rates increased throughout the quarter, impacting fixed-income markets and likely helping cause the equity sell-off at the end of the year.
- Growth Stock Dominance: Growth stocks continued to outperform, while small-cap value stocks showed some signs of a potential catch-up trade.
- AIQ’s strategies generally performed well in both the fourth quarter and for the year.
- Market Outlook: The market outlook is cautiously optimistic, with indicators such as a strong labor market, stable inflation, and potential pro-growth policies under the new administration being monitored closely
- Key Risks:
- Valuation Concerns: High stock market valuations pose a risk, particularly for large-cap companies.
- Inflation Uncertainty: The outlook for inflation remains complex and could significantly impact both equities and fixed income.
- Geopolitical Risks: Ongoing global conflicts and potential policy shifts under the new administration could increase market volatility.
- Investment Strategy:
- Maintain a focus on growth stocks at reasonable valuations, while broadening exposure beyond the largest companies.
- Favor small and mid-cap companies with strong fundamentals and growth drivers.
- Remain cautious on bonds due to low credit spreads and potential for interest rate volatility.
- Adjusted portfolio hedging strategies to mitigate risks associated with increased volatility and potential market drawdowns.
Market data and portfolio analysis provided by Bloomberg.
IMPORTANT DISCLOSURES:
Our portfolio characteristics and holdings are subject to change at any time and are based on a representative portfolio. Holdings and portfolio characteristics of individual client portfolios may differ, sometimes significantly, from those shown. The investments presented are examples of the securities held, bought and/or sold in our strategies during the last 12 months. These investments may not be representative of the current or future investments of those strategies. You should not assume that investments in the securities identified in this presentation were or will be profitable. Diversification and asset allocation do not ensure a profit or guarantee against loss. We will furnish, upon your request, a list of all securities purchased, sold or held in the strategies during the 12 months preceding the date of this presentation. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of securities identified in this presentation. One or more of our officers or employees may have a position in the securities presented and may purchase or sell such securities from time to time. The benchmark shown for each model is a different weighted blend of various indexes or securities. Indexes are unmanaged, statistical composites, and their returns do not reflect payment of fees an investor would pay to purchase the securities they represent. Such costs would lower performance. It is not possible to invest directly in an index.
Investment advice offered through Advisor Resource Council, a registered investment advisor. Additional information, including management fees and expenses, is provided on our Form ADV Part 2, available at the SEC’s Investment Advisor Public Disclosure website. As with any investment strategy, there is potential for profit as well as the possibility of loss. We do not guarantee any minimum level of investment performance or the success of any portfolio or investment strategy. All investments involve risk (the amount of which may vary significantly) and investment recommendations will not always be profitable. The underlying holdings of any presented portfolio are not federally or FDIC-insured and are not deposits or obligations of, or guaranteed by, any financial institution. Past performance is not a guarantee of future results.
The Standard & Poor’s 500 b. (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot directly invest in an index.
The Russell 1000 Index measures the performance of the large-cap segment of the US equity universe. It includes the approximately 1,000 largest US stocks, representing approximately 93% of the value of the US equities market. It is not possible to invest directly in an index.
The Russell 2000 Index measures the performance of the small-cap segment of the US equity universe. It includes approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership. It is not possible to invest directly in an index.
MSCI EAFE: The MSCI EAFE Index (Europe, Australasia, Far East) is designed to measure the equity market performance of developed markets outside of the U.S. and Canada. You cannot directly invest in this index.
MSCI Emerging Markets Index captures large and mid-cap representation across 24 Emerging Markets (EM) countries*. With 1,330 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.
Bloomberg US Aggregate Index is a broad-based benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. You cannot directly invest in an index.
Bloomberg Barclays U.S. Corporate High Yield Index measures the market of USD-denominated, non-investment grade, fixed-rate, taxable corporate bonds. Securities are classified as high yield if the middle rating of Moody's, Fitch and S&P is Ba1/BB+/BB+ or below. The index excludes emerging market debt. It is not possible to invest directly in an index."
FTSE (3M) Treasury Bill Index is intended to track the daily performance of 3-month US Treasury bills. The indices are designed to operate as a reference rate for a series of funds.
Investment advice offered through AIQ Asset Management, a DBA of Advisor Resource Council, a registered investment advisor.
Additional information, including management fees and expenses, is provided on our Form ADV Part 2. As with any investment strategy, there is potential for profit as well as the possibility of loss. We do not guarantee any minimum level of investment performance or the success of any portfolio or investment strategy. All investments involve risk (the amount of which may vary significantly) and investment recommendations will not always be profitable. The underlying holdings of any presented portfolio are not federally or FDIC-insured and are not deposits or obligations of, or guaranteed by, any financial institution. Past performance is not a guarantee of future results.