Market Comments - Q2 2024
Updated on 30.06.2024
Market development
In Q2, global equities continued on the upward trajectory that also affected Q1.
However, we did see a bump in the road, as global equities slumped in April, breaking the streak of several positive months. April was affected by rising yields, which put the equity markets under pressure.
Yields rose due to higher-than-anticipated inflation in the US, coming in well above the US central bank’s (FED) 2% inflation target. This lowered market bets on how soon and how rapidly the FED will be cutting rates. Subsequently, yields stabilised again, on new signs of lower US inflation and, most recently, slighter weaker growth numbers for the US economy. Furthermore, the European Central Bank (ECB) and the central bank of Denmark, Danmarks Nationalbank, cut their policy rates in June.
The trend of lower yields and reasonable earnings reports coming out in May and June caused renewed optimism in the stock market, resulting in several new all-time highs. On the surface, this indicates a very robust stock market, and new all-time highs always a strong signal in and of itself is. However, looking underneath the surface, the equity market is still led by the most valuable companies (also called the Magnificent 7).
Performance
Over the course of the second quarter, we increased our stock allocation twice - in April and June.
Overall, the global stock market set a new all-time high, meaning our portfolios have benefited from the increased stock allocation. The equity portfolio yielded total returns of more than 4% in Q2, which was better than the global equity market. On the full quarter, we saw a rising yield level, generating total returns on our bond portfolio to nearly 0.5%.
|
|
The fund* |
Benchmark |
Diff. |
|
Latest quarter |
0,84% |
0,12% |
0,72% |
|
Year-to-date |
3,05% |
1,72% |
1,33% |
|
*See past performance under the tab Past Performance |
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Right now
Based on elevated optimism going into the 2nd quarter, we saw an increased risk of an equity market dip. As previously mentioned, this materialised already in April (chart 1), and we utilised the dip to increase the stock allocation in our portfolios. In early June, we chose to increase the share of stocks once again during Q2, due to a continued market uptrend, which we believed would potentially have more room to run.
Going into Q3, we see a positive sentiment in the financial markets in the upper end, which makes financial markets more vulnerable to bad news. Nevertheless, we are not particularly concerned about a potential slump, as the market is in an upward trend, and we do not see any downside signals in the economy. We are obviously keeping a watchful eye on the emerge of any adverse aspects that would impact the growth picture and, hereby, the stock market. For now, we are however very comfortable with being overweight on equities.
Please note
Past performance is not a reliable indicator of future results. The value of and return on your investment may fall, and you may not get back the full amount invested. An initial charge is usually made when you purchase and sell units. The fund may invest in instruments denominated in various currencies. At least 75% of the fund assets will at all times be invested in EUR or hedged to EUR. You should be aware that changes in exchange rates may have an adverse effect on your investment. This may also be the case if EUR is not your base currency.
Information in this text should not be regarded as investment advice, and investors should consult their own investment and tax advisers before buying or selling.