Market Comments - Q3 2023

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Updated on 31.12.2023

Market development
2023 was a really good investment year. For global equity investors, the year was even extraordinarily good with decent two-digit returns. Also Danish bonds had a very good year, although they could not keep up with the global equities throughout the full 2023.
However, if we look at the fourth quarter in isolation, there is only little difference between the returns on bonds and the returns on equities. Both equities and bonds experienced tailwinds during the last months of the year.
The expectation of lower interest rates in 2024 caused the 10-year American and German interest rates to fall more than 1 percentage point from the top at 5% and 3%, respectively, in October. For the equity markets, the high interest rates in October became an increasing cause for the concern whether this would push economic growth over the edge. Therefore, the equity market applauded the falling interest rates in the past few months of 2023.
The reason for the sudden turn in the interest rate market must to a high degree be ascribed to the signals from the central banks that inflation has peaked and is under control, which may even make room for interest-rate cuts 2024.

Performance
Both equities and bonds gained markedly in the fourth quarter.
Equities closed 2023 on a favourable note. The return was broadly based, yet it should be noted that the emerging equity markets could not quite keep up with the global equity market in the quarter.
The fourth quarter saw a relatively significant change in sentiment in the bond markets with resultant falling interest rates. Specifically, the falling interest rates resulted in excellent bond returns.

 

The fund*

Benchmark

Diff.

Latest quarter

7,76%

8,76%

-1,00%

Year-to-date

16,13%

18,06%

-1,93%

*See past performance under the tab Past Performance

Right now
After the strong increases in the equity markets in November and December, the sentiment in the equity market has increased markedly. In our opinion, the currently very positive sentiment in the equity market has become too extreme and makes the equity market vulnerable to negative news in the short term.
Therefore, we chose to ease the pace and slightly reduce our share of equities in the portfolios in early January.
In the coming period, we see possibilities to both increase and reduce our share of equities but wait for clearer signals concerning the direction before we make further changes in the portfolios.

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.