March 2024 Returns and Asset Performance
April 6, 2024
Major Asset Classes
April 2024
Performance Comparison
Introduction
April 2024 returns for the S&P 500 index (-4.2%) were negative after five straight months of gains. The end of March sent clear ‘risk-off’ signals. Market conditions included a spike in 10Y yields and the cost of risk insurance (e.g. VIX index), sharp declines in the probabilities for a Fed rate cut, sharp declines in lumber prices, plus rallies in safe haven assets like gold and Utilities. Well configured risk-off signals are key to preserve capital and for aggressive accounts to move to cash. Meanwhile, passive index portfolios can take comfort that the S&P 500 remains above 5,000 and year-to-date returns are up (+5.6%). Moreover, the United States currently has the best growth and economic stability globally. Strong government spending is evident, employment remains high, and Q1 net income growth for S&P 500 companies is +5% year-on-year.
The following brief decomposes asset group returns for April. The visual summary of returns across and within the asset groups is intended to identify new opportunities and to help readers to quickly benchmark their own portfolio returns.
Core US Indices
The large-cap S&P 500 index (-4.2%) outperformed the the NASDAQ-100 index (-4.4%) in April. The benchmark S&P500 index also beat the equal weight S&P 500 index (-4.8%). Finally, the S&P 600 SmallCap index (-5.5%) and the S&P 400 MidCap Index (-5.9%) also lagged behind large-caps.. Year-to-date (YTD), the S&P 500 (+5.6%) continues to best the NASDAQ-100 index (+3.8%), but trails the mega large-cap S&P 500 top 50 index (+7.8%).
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US Sector Indices
April returns for the the top sectors were led by large cap Utilities (+1.7%), Energy (-0.9%), and the defensive Consumer Staples (-1.1%) sector. For the third straight month, large-cap Technology (-5.8%) lagged the S&P 500 index. The monthly sector rankings also saw many small cap sectors at the bototm of the performance ladder. The large-cap Real Estate (-8.4%) sector was April’s worse performer. Year-to-date, the top sectors are large cap Energy (+12.4%), Financials (+7.7%), and Communications Services (+7.4%).
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US Factor Indices
Factor portfolios are constructed to 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 April, returns were lead by the S&P 500 High Dividend Index (-2.1%), the US Minimum Volatility Index (-3.7%), and the S&P 500 Growth index (-3.8%). Small-cap value, mid-cap value, and large-cap value indices all under-performed the benchmark S&P 500 index by large margins. Since the start of the year, the US Momentum Factor (+13.0) has lead the factor rankings. Other strong performers include the S&P400 mid-cap Growth index (+8.5%), and the S&P 500 large-cap Growth index (+8.3%).
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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. Unfortunately, red ink hit all the megatrend portfolios. The heaviest losses were seen in blockchain shares (-19.4%), new Technology Breakthroughs (-6.1%), and the Robotics/AI portfolio (-5.8%). Since January, top performers include Semiconductors (+11.5%), Technology Breakthroughs (+4.9%), and the Cloud/5G portfolio (+2.1%). Renewable Energy (-15.0%) and EVs (-17.1%) are both struggling.
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Developed Market Equities
International developed markets (-3.3%) fared better than the main US indices in April. The top developed markets included Hong Kong (+3.2%), Singapore (2.5%), and the United Kingdom (+1.4%). Laggards included Australia (-5.4%), Japan (-5.7%), and Israel (-7.4%). The best performing developed markets in 2024 are Ireland (+8.9%), Italy (+7.7%) and the Netherlands (+7.0%).
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Emerging Market Equities
April returns for the S&P Emerging Markets Index (+0.1%) beat the US and Developed market indexes for the second month running. Top performers were Turkey (+11.9%), China (+5.4%) and Peru (+4.3%). India (+1.5%) was also a solid performer. Year-to-date, India (+7.3%) is also a top three performer, along with Turkey (+24.5%) and Peru (+18.8%).
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Government Bonds
The US fixed income markets were again down in April, as seen by the Aggregate Bond Index (-2.48%). The 20+ year bond (-6.46%) had steep declines yields spiked on dramatic declines in rate cut probabilities, large Treasury note and bond auctions, and increases in inflation. The best fixed income segments included short-term Treasury Bills (+0.44%), short-term Municipal paper (-0.2%), and US Treasury Inflation Protected Securities 0-5 years (-0.17%). Year-to-date, the total return for the US Aggregate Bond index (-3.48%) is significantly below the total return for the Global Aggregate Bond index (-0.72%), as well as the returns for Emerging Market Government Bonds (-0.90%).
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Corporate & Infrastructure Bonds
The iBoxx Corporate Bond Index (-1.35%) proved to be a safe haven versus US stocks with strong performance seen in Hedged High Yield Bonds (+0.3%), A-rated US Corp bonds 1-5 years (-0.64%), and Global Infrastructure Project Bonds (-0.65%). US infrastructure Project Bonds (-2.61%) failed to keep pace with the group benchmark, but still outperformed US equities. Real-Estate Investment Trusts lagged US equities with multi-Sector REITS (-6.99%) showing the steepest losses. Since January, US Infrastructure Project Bonds (+5.27%) are keeping pace with US equities, even if performance lags the index slightly. Hedged High Yield Bonds (+3.78%) also lead among all fixed income results, as do Emerging Market Corporate Bonds (+2.79%).
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Commodities
Commodities, as measured by S&P GS Commodity Index (+1.0%) continue to inflate. Coffee (+16.8%), Copper (+14.0%), and Natural Gas (+12.9%) topped the chart in April. Silver (+6.4%) also had strong gains. The weakest commodities were Cotton (-14.7%), Sugar (-12.5%) and Soybean Oil (-11.8%). Since December, the GS commodity index is up an impressive 11%.
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Currencies
The strength in Commodities since December is notable since that the US Dollar (+5.0%) also increased in the four months. Year-to-date, the weakest currencies have been the Japanese Yen (-10.6%), the Turkish Lira (-8.9%) and the Swiss Franc (-8.7%).
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Cryptocurrencies
Cryptocurrencies also topped out when risk-off signals were generated at the end of March. Bitcoin (-14.3%) is the group benchmark and was beat by tether (-0.1%). However, all the other mainstream cryptocurrencies were down significantly with Avalanche (-40.1%) down the most, followed by Dogecoin (+39.4%). Year-to-date, Dogecoin (+46.5%) leads the pack, followed by Bitcoin (44.0%), and Ethereum (+30.9%).
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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.
