Market update: First quarter 2024

Last quarter was an eventful one for financial markets. Overall market optimism caused equities to rise to unprecedented levels. Bonds, on the other hand, experienced challenging months, partly due to persistent inflation data.

Review of first quarter 2024: optimism in the market despite persistent inflation.

The fourth quarter of 2023 brought positive sounds due to higher-than-expected growth in the U.S. economy. This combined with global encouraging signs of resurgent economic growth caused investors to be optimistic in early 2024. Partly as a result, the stock market achieved historically high returns combined with low volatility. While the stock market experienced high peaks, the bond market stagnated. This is mainly due to the persistent inflation rates. With inflation not dropping, central banks have indicated they will not lower interest rates as much as previously expected. This has caused yields in the bond market to stagnate. This has mainly affected government bonds and corporate bonds of highly creditworthy companies. This is because interest rates greatly affect the returns of these safe investments. Corporate bonds with more risk, also called High Yield corporate bonds, have done better. This is because these investments also get returns from the credit risk of companies that are less well regarded.

Best fund performance in first quarter 2024:
Northern Trust World Custom ESG Equity Index Fund + 11.43%

Last quarter brought very positive investment returns for equities. Bonds did less well, where especially corporate bonds of well-regarded companies and government bonds underperformed. The equity portfolio as a whole showed a return of 10.2%.

Historically high spikes in the stock market, what does it mean for my portfolio?

The stock market performed exceptionally well last quarter. However, market sentiment is that the stock market will fall again in the coming period. According to Nobel Prize winner Robert Shiller, the prices of U.S. stocks have increased more than the earnings of the underlying companies. This could lead to a downward correction in the stock market. "When prices get too far ahead of profits, eventually there will be a correction," he states. 

Should you act on this and adjust your portfolio accordingly, by selling your shares, for example? No! The Vive investment model ensures that your portfolio is optimally diversified for your risk level. This means that such turmoil will have little effect across the board of your portfolio. In addition, it has been scientifically proven that it is almost impossible to time the market, that is, try to predict when the stock market will go down. So chances are you will miss out on returns if you do this.

Robert Shiller's advice is: use low-cost index funds to include the entire stock and bond market in your portfolio and hold them.

This dovetails perfectly with Vive's message. We'll repeat it again: don't let the market disrupt your long-term goals. Vive's investment strategies take into account the risks that are acceptable for your plan. See in the app how you have set your acceptable risk level for your investment plans. Movements in financial markets are not a reason to adjust your risk. A change in your personal situation may be. 

If you adjust your acceptable level of risk such that it requires adjusting your current investment portfolio, Vive will automatically take care of that. And consistently sticking to your investment strategy with well-diversified portfolios is the key to long-term success.