The Winning Strategy for US Equity Portfolios in 2024: Momentum and Growth Dominate
In the ever-evolving landscape of US equity portfolios, one trend remains clear: betting against momentum and large-cap growth is proving to be a losing proposition in 2024. Factor ETFs have been a key indicator of this dominance, with risk premia continuing to drive performance throughout the year.
Year to date, the iShares MSCI USA Momentum Factor ETF has emerged as the leader of the pack, boasting an impressive 29.4% total return. This strong performance outshines other factors by a significant margin, including the broad market’s 20.8% advance represented by SPY.
While all major equity factors have posted gains in 2024, the disparity in results is striking. The weakest performer, small-cap value, has only seen a modest 3.7% increase, highlighting the continued strength of momentum and growth strategies.
Despite the current trends, investors are keeping a close eye on potential catalysts that could shift the dynamics of the market. Two events in particular, a port strike and escalating conflicts in the Middle East, have the potential to impact the economy and financial markets in the coming weeks.
Although the US stock market has remained relatively stable thus far, the looming uncertainty surrounding these events could lead to significant market reactions. Additionally, the upcoming US election holds the potential to alter market expectations, further adding to the volatility.
On a technical level, the factor leader MTUM continues to show strength, with a resilient performance following a summer sell-off. Chief investment strategist Mary Ann Bartels of Sanctuary Wealth emphasizes the importance of liquidity in the current market environment, highlighting the Fed’s rate cuts as a key factor supporting continued market growth.
As we navigate through October’s volatility, it is clear that there is still ample potential for growth in this bull market. Embracing the uncertainty and leveraging the available opportunities could prove to be a winning strategy for investors in the months ahead.
Analysis:
– Momentum and large-cap growth strategies are dominating US equity portfolios in 2024, showcasing the continued strength of these factors.
– The disparity in performance among major equity factors highlights the importance of selecting the right investment strategies to maximize returns.
– Potential catalysts, such as a port strike and escalating conflicts, could lead to market volatility and impact investor sentiment.
– The technical profile of the factor leader MTUM remains strong, signaling resilience and potential for further growth.
– Market strategist Mary Ann Bartels emphasizes the importance of liquidity and market dynamics in driving continued market growth, urging investors to embrace the volatility and capitalize on opportunities.