2024 half-year review
Equities started 2024 with strong gains. Almost all major geographies rallied during the year, with the US and China being the best and worst performers, respectively. In the US, growth stocks have outperformed their value peers in all sizes, while large-caps delivered the strongest gains in all styles. Meanwhile, tech stocks had the strongest rally, as evidenced by a sizeable outperformance of Technology and Communications with respect to other S&P 500 sectors.
Looking ahead, analysts maintain a positive outlook for growth stocks over the next 6 to 12 months period. Particularly appealing areas in growth category are semiconductors, medical technologies, and defense manufacturing & servicing.
Yields remain on decade highs in fixed income. The last time DM fixed income markets offered yields this high was back in 2007. As such, investors no longer need to take excessive risk to generate strong income from debt securities. One thing to note, however, is that spreads have tightened a lot on US investment grade bonds. Therefore, it may be reasonable to focus on treasuries for safety while seeking risk (and therefore income) in high yield bond segment.
