Market update: Fourth quarter 2023

Last quarter was a good quarter for the financial markets. All investment categories showed a positive investment return. Softer inflation has created optimism in the market. Due to this softer inflation, interest rates have stabilized and there is speculation about a possible decline in the future. This has led to an increase in the value of bonds and equities. What does this mean for your investment plans?

Review of the fourth quarter of 2023: interest rate stabilization and consequent optimism in the market

Last quarter, the central banks decided to keep interest rates stable, after inflation in the European Union and the US turned out to be lower than previously thought. 

The US Federal Reserve decided to keep interest rates unchanged at 5.25%-5.50% in the past winter months. The European Central Bank decided to keep short-term interest rates stable in the months of October to December. The central banks expect interest rates to fall in 2024, provided inflation continues to fall. An inflation level of 2% is targeted in the Eurozone.

The stabilization of interest rates has made investors realize in the past quarter that the peak of interest rates may be behind us and there may even be a fall in short-term interest rates in 2024. This possibility has created optimism in the market, which is reflected in the increase in the value of shares and bonds.

Best fund performance in the fourth quarter of 2023:

Northern Trust World Small Cap ESG Low Carbon Index Fund +8.42%

Last quarter brought a positive investment return for all Vive's investment categories, from the money market to equities. Even for bonds, it has been a strong quarter due to the fall in long-term interest rates. The equity portfolio as a whole showed a return of 6.7%. The highest return was achieved in the shares of small companies, namely 8.42%. 

Geopolitical unrest, what does that mean for my portfolio? 

There is a lot of geopolitical unrest at the moment. This creates uncertainty, which can also manifest itself in the financial market. Take, for example, the unrest in the Red Sea. The attacks by Houthi rebels in Yemen on cargo ships in the Red Sea and the Suez Canal have caused a price increase in oil, natural gas and gold.  

Shares in companies that are affected by this will show a lower return. Should you act on this and adjust your portfolio accordingly? No, Vive's investment model ensures that your portfolio is diversified as well as possible for your risk level. This means that this type of unrest will have little effect across the board on your portfolio.

We keep repeating our message: 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. Check the app to see how you have set your acceptable risk level for your investment plans. The movements in the financial markets are not a reason to adjust your risk. However, a change in your personal situation may be. 

If you adjust your acceptable risk profile in such a way that your current investment portfolio needs to be adjusted, Vive will take care of this automatically. And consistently sticking to your investment strategy with well-diversified portfolios is the key to long-term success.