August 2024 Returns and Asset Performance
August 31, 2024
Download – REIT Masterclass
October 10, 2024
Major Asset Classes
September 2024
Performance Comparison
Introduction
September returns for the S&P 500 index began with a price correction of -4.8% and then rallied back to gain +2.0% for the month, as inflation continued to stabilize and given a jumbo rate cut of 0.5% by the Fed. Moreover, analysts’ one-year target prices for the index inched up to an average of 6,265, offering a potential gain of 7.7% from the September close. Meanwhile, the S&P 500 Large-Cap index continued to outperform the S&P 400 Mid-Cap index (+1.1%) and the S&P 600 Small-Cap index (+0.8). Optimism continues to be well placed. US investors benefit from rising productivity, income, housing prices, and year-to-date stock market performance. As a result, the market has begun to transition from purely defensive sectors.
The following brief breaks down returns for September by asset group, sector and leading industries. The aim of the visual summary is to help investors to identify new opportunities and to benchmark their own portfolio returns.
Core US Indices
For the first time in many months, private equity (+5.2%) lead the core US indices, followed by the NASDAQ-100 index (+2.6%) and the S&P Top 50 index (+2.4%). Market breadth also strong again in September, as evidenced by the S&P 500 Equal Weight index (+2.3%), which edged-out the benchmark large-cap index (+2.0%). Year-to-date (YTD), the influence of the mega-caps is evident as the the Top 50 index (+26.8%) is outperforming the the benchmark S&P 500 index (+20.8%).
Click to enlarge
US Sector Indices
Most select sectors posted positive September returns. The top large-cap sectors showed a blend of defensive and cyclical sectors as the market is transitioning away from purely defensive sectors. The top sector was Consumer Durables (+7.3%), followed by Utilities (+6.6%), and Communications Services (+3.8%). The weakest sectors were Financials (-0.5%), Healthcare (-1.7%), and Energy (-3.0%). As pointed out last month, the high number of sectors beating the S&P 500 index is ongoing evidence market breadth is expanding. Since January, the top sectors are Utilities (+30.5%), Communication Services (+25.5%), and financials (+21.9%). Looking forward, underperforming sectors can be expected to catch up if the rally gains legs, notably Industrials, Energy and Health Care.
Click to enlarge
US Factor Indices
Factor portfolios are constructed to emphasize the core drivers behind returns, such as company size, value, profitability, growth, and momentum. Multi-factor portfolios combine two or more factors. During September, US factor returns were broadly positive. Top factor returns included the US Momentum Factor (+3.0) and the S&P 500 Growth index (+2.8%), both of which beat the benchmark index. Since the start of the year, the US Momentum Factor (+29.8%) continues to lead all factor indices. Other top performers include the S&P500 Growth index (+27.9%), and the U.S. Quality factor (+22.8%).
Click to enlarge
US Megatrend Equities
US megatrend equities are thematic growth portfolios. The aim is to select shares that capture the primary secular trends of the market. September returns were lead by Electric Vehicles(+9.0%), Blockchain shares (+4.8%), and rate-sensitive Renewable Energy (+2.8%). Since January, all the thematic portfolios are traiing the benchmark. Semiconductors (20.6%) lead the pack, followed by Tech breakthroughs (+19.7%) and Cloud/5G (+13.6%).
Click to enlarge
Developed Market Equities
International developed markets (+1.2%) trailed the leading US indices in September. However, Hong Kong (+15.3%) had a late month surge following new stimulus efforts by the Chinese Communist Party. Singapore (+7.4%) and Australia (+4.8%) also benefited. Laggards included Japan (-0.6%) and Denmark (-2.4%). The best performing developed markets in 2024 are Singapore (+20.6%), Italy (+17.6%) and Spain (+17.1%).
Click to enlarge
Emerging Market Equities
September returns for the S&P Emerging Markets Index (+5.4%) outperformed the US S&P 500 index by a factor of two. China (+21.7%) was the standout, followed by Thailand (+12.6%) and the Emerging Market Dividend index (+7.4%). Regular favorites, India (+1.4%) and Mexico (+1.35), lagged the US. Year-to-date, Peru (+28.6%) and China (+25.5%) top the list, while India (+19.6%) and Taiwan (+17.5%) also have solid performance. Unlike 2023, Mexico (-20.2%) and Brazil (-12.9%) have lost significant ground.
Click to enlarge
Government Bonds
The US fixed income markets again had returns as seen by the Aggregate Bond Index (+1.33%). Long duration bonds with maturities of 10-20 years (+2.13%) outperformed stocks, as did Emerging market Sovereign Bonds (+2.01%). Following the Fed rate cut, we also see strength in Treasury Inflation Protected Securities (+1.3%). Year-to-date, the US Aggregate Bond index (+4.88) is topped only by Emerging market government bonds (+8.66%). High yields and a falling dollar are likely to continue to favor Emerging market fixed income securities over time.
Click to enlarge
Corporate & Infrastructure Bonds
The iBoxx Corporate Bond Index (+1.7%) beat the August returns of the government Aggregate Bond index (+1.33%). However, year-to-date returns for corporate bonds (+8.62%) are returning almost twice the return of government notes and bonds. The key driver has been industries critically sensitive to interest rates, notably real estate and infrastructure project bonds. Returns on REITs since January (19.72%) are beating large cap equities and all other corporate income opportunities. In comparison, September returns for US infrastructure bonds (+3.49%) beat stocks for the month and show solid gain (+18.18%) for the year.
Click to enlarge
Commodities
Commodities, as measured by S&P GS Commodity Index (-0.2%) were flat for the month, though a wide range of results are seen across commodities. Natural Gas (+37.4%) easily topped out the list and was followed by Oats (+19.4%) and Sugar (+17.0%). On the downside, Cocoa (-20.1%) has finally seen losses, followed by Gasoline (-11.3%) and Crude Oil (-7.3%). Since December, the GS commodity index is up 4.7%.
Click to enlarge
Currencies
The U.S. Dollar index (-1.1%) fell in September. The Brazilian Real (+3.8%) led currency gains, while the Yen (+1.7%) and the Euro (0.7%) were also up. Year-to-date returns for the U.S. Dollar index (-0.5%), while the British Pound (+4.9%) is one of the top performers. The weakest currencies since the first of the year include the Mexican peso (-13.7%) and the Turkish Lira (-13.7%).
Click to enlarge
Cryptocurrencies
Cryptocurrencies were had positive September returns with Bitcoin (+19.5%), Dogecoin (+12.1%), and Solana (+10.5%) leading the asset group. Year-to-date, gains on Bitcoin (+50.4%) remain impressive.
Click to enlarge
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 or meeting, please contact us here.
Saffron Capital LLC is employee-owned and Minnesota-based. The company uses Interactive Brokers as its bank custodian and clearing merchant.
