Global Asset Class Performance in 2024
The year 2024 has brought a shift in the leaders and laggards among major asset classes compared to the previous year. Let’s take a closer look at how different asset classes are performing so far this year.
Leaders and Laggards
- Global Equities ex-US: Leading the pack are global equities ex-US, showing strong performance in 2024.
- Commodities: Following closely behind are commodities, demonstrating a robust showing in the market.
- US Equities: In contrast, the US equities market is displaying relatively modest results year to date.
Specific Performances
- Foreign Shares in Developed Markets: Vanguard FTSE Developed Markets ETF has seen a significant rally of 7.2% this year.
- Emerging Markets Stocks: Emerging markets stocks are in second place with a rise of 5.4%.
- Commodities: Commodities are holding strong in third place with a 4.9% increase.
- US Stocks: US stocks are trailing behind with a modest gain of 2.1%.
Global Market Index (GMI)
The Global Market Index (GMI) is up 3.0% so far this year. GMI serves as an unmanaged benchmark, holding all major asset classes (excluding cash) in market-value weights through ETFs. It provides a competitive benchmark for multi-asset-class portfolios.
Analysis and Insights
While it’s important to note that a couple of months of data could be considered noise, these early numbers may indicate a shift in the global market landscape. The outperformance of equities ex-US is prompting analysts to consider the potential benefits of global diversification and mean reversion.
Expert Perspectives
According to Robert Ruggirello of Brave Eagle Wealth Management, the market may be experiencing a reversion to the mean after a period of US exceptionalism. This shift could signal the importance of international diversification in today’s rapidly changing economic and political environment.
Veteran portfolio analyst Larry Swedroe emphasizes the challenge of maintaining a global diversification strategy in recent years. While the prudent approach is to diversify globally, investors often fall victim to recency bias, potentially abandoning their well-thought-out plans at the wrong time.
In conclusion, the evolving performance of various asset classes in 2024 highlights the importance of staying informed, maintaining a strategic view, and considering global diversification as a key component of a well-rounded investment strategy.