Download – Bond Market Masterclass
March 28, 2024
April 2024 Returns and Asset Performance
May 5, 2024
Major Asset Classes
March 2024
Performance Comparison
Introduction
March 2024 returns marked the second quarter and the fifth straight month of positive stock market gains. Economic strength and diminishing recession fears led to the best Q1 U.S. market performance since 2019, with total returns for the S&P500 index up +10.2% year-to-date and the S&P500 top 50 index up 11.9%. Meanwhile, the rotation away from technology shares and fixed income securities., first pointed out last month, gained pace as the probability of a rate cut in June dropped from 69.4% in February to 53.2% currently. In response, we decompose asset group returns to better illustrate the shifts taking place. The brief also provides a simple visual summary of performance to assist readers to benchmark their portfolio results.
Core US Indices
In March, it was notable that the S&P 500 index (+8.4%) and the NASDAQ-100 index (+6.6%) both lagged behind the S&P500 Equal Weight index (+8.7%) and the S&P 1500 index (+8.8%). Moreover, we see that the Mid Cap S&P 400 Index (+11.8%) topped the list of core market indices. Meanwhile, the Small Cap S&P 600 Index (+6.6%) has decent retuns, but failed to keep pace with large- and mid-cap equities. Year-to-date (YTD), the S&P 500 (+10.2%) has now passed the NASDAQ-100 (+8.6%), but still trails the heavy concentrations within the the S&P 500 top 50 index.
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US Sector Indices
March returns for the the top sectors of the market were led by large cap Energy (+14.1%), Materials (+13.4%), and Industrials (+12.5%). The persistence of these sectors during the month among the top 4 of 11 large-cap sectors was notable and dominated our market positioning. At the same time, March saw leadership from small-cap Energy (10.8%), Small cap materials (+10.4%), and small cap Consumer Discretionary (10.2%) shares, all of which beat the benchmark S&P 500 index. Large cap Technology (+5.5%) lagged behind the benchmark for the second month straight, with the performance gap widening to 340 basis points. The top sectors YTD are large cap Energy (+13.5%), Communications (+12.7%) and Financials (+12.4%).
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US Factor Indices
Factor portfolios hold shares that focus on the core drivers behind returns, such as company size, value, profitability, growth, and momentum. Multi-factor portfolios focus on two or more factors when selecting shares. During March, returns were lead by small-cap growth (+15.8%) US momentum (+13.2%) and US Quality (+9.5%) factors. On a YTD basis, the US Momentum factor (+19.5%) tops the leader board, followed by mid-cap Growth (+15.4%) and large-cap growth (12.5%).
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US Megatrend Equities
US megatrend equities are thematic growth portfolios that seek to capture the primary secular trends of the market. For example, March returns were once again lead by Blockchain shares (+35.7%) and Semiconductors (+15.8%). The Renewable Energy sectors again trailed results in March, but turned in a positive return for the first time in months. We also see that performance is much more variable on a YTD basis. Semiconductors (+17.8%) sit at the top of the list and Electric vehicles (-12.0%) is at the bottom.
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Developed Market Equities
International developed markets (+6.2%) again under performed US shares in March. The top developed markets included Italy (+12.6%), Ireland (+11.4%), and Germany (+9.2%). Meanwhile, results across the large economies varied, as seen by Japan (+7.8%) and the UK (+5.5%). Year-to-date, Ireland (+13.4%), Japan (+11.2%) and Italy (11.2%) top the chart, with Hong Kong (-10.5%) in the worse shape.
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Emerging Market Equities
March returns for the S&P Emerging Markets Index (+6.5%) marginally beat the Developed market index. Top performers were Peru (+16.4%), Korea (+12.8%) and Taiwan (+9.0). China (+8.7%) beat the group index and the S&P500 index. India (+3.4%) trailed the group benchmark, as did Mexico (+4.0) and Brazil (-1.5%).
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Government Bonds
The US fixed income markets were down in March, as seen by the Aggregate Bond Index (-0.88%). The 20+ year bond (-1.49%) performed well early in the month, but sold off hard at month end. International bonds did much better with the Emerging Market index (+2.8%) and the the Global Aggregate Bond index (+0.48%) generating positive total returns. Year-to-date, the US aggregate Bond index (-1.03%) is down, with the 20+ year bond down (-3.7%) the most.
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Corporate & Infrastructure Bonds
The iBoxx Corporate Bond Index (+1.4%) was positive, with strong performance seen in US infrastructure projects (+12.47%), global infrastructure projects (+4.96%) and emerging market corporates (+4.6%). US infrastructure projects (+8.08%) top the chart year-to-date, while the iBOXX corporate index (+1.51%) outperforming Treasuries by a wide margin.
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Commodities
Commodities, as measured by S&P GS Commodity Index (+5.3%) confirmed that inflation has solid traction again. Cocoa (+102.5%) topped the chart in March, followed by Gasoline (+26.5%) and Lean Hogs (+13.5%). Natural Gas (-16.0%) remained under pressure, as were most grain prices. Since December, the GS commodity index is up an impressive 10%.
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Currencies
The strength in Commodities since December is notable since that the US Dollar (+3.2%) also increased in the first quarter. Year-to-date, the weakest currencies have been the Turkish Lira (-9.0%) and the Yen (-6.8%).
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Cryptocurrencies
Cryptocurrencies again had spectacular returns in March. Dogecoin (+171.1%) was the strongest, followed by Solana (+98.1%) and Bitcoin (+64.1%). Year-to-date, bitcoin (66.0%) remains one of the highest performing assets.
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Have questions or concerns about the performance of your portfolio? Could you benefit from a custom portfolio formulation that better reflects your goals and risk appetite? Whatever your needs are, we are here to listen and to help. To schedule a call with us, please contact us here.
