As investors navigate through the tumultuous seas of financial markets, 2024 has proven to be a year of plentiful yields for those who have embraced a globally diversified portfolio strategy. Amidst the wreckage left by a few losers, the rallying cry of beta has favored the brave, particularly for US-centric approaches.
When we look through the lens of ETF proxies, a panorama emerges where nearly all corners of the global market have showcased gains up to the current date. Leading the charge are US equities, boasting a remarkable 21.8% uptick since the year’s commencement. If this momentum persists till the year’s end, VTI is poised to showcase its second consecutive 20%-plus surge. Opting out of US stocks, hence, continues to cast a significant shadow over portfolio strategies.
The majority of major asset classes have seen upward trajectories throughout the year, with the exception of two varieties of foreign bonds: government securities in developed markets and inflation-indexed government bonds (BWX). Otherwise, the tune of market gains resonates across the board.
Keeping it simple with a passive blend of the above-mentioned markets, weighted by market value, has once again proven to be a winning formula this year. The Global Market Index (GMI) has recorded an impressive 18.1% surge year-to-date.
The prevailing trend has allowed more aggressive stances to flourish in 2024. For instance, a couple of quasi-passive global asset allocation ETFs have shown striking results. The aggressive variant is up by 15.4% this year, a clear distance ahead of the 8.0% gain for its conservative sibling.
Successful portfolios in 2024 are anticipated to favor overweight positions in US and foreign equities, as well as commodities – the following most potent performers after US stocks this year.
Within the realm of the US stock market, the bullish surge is marking its two-year anniversary, as per certain calculations. While concerns loom over the vulnerability of the market after a robust run, the technical landscape for the S&P 500 index remains distinctly tilted towards the upside.
Notably, the recent decision by Goldman Sachs to elevate its year-end S&P 500 target to 6,000 underscores the prevailing optimism. Quoting a report on Yahoo Finance that garnered insights from Wall Street strategists:
“Barring unforeseen shocks, the path towards higher grounds appears unimpeded, poised on the momentum of accelerating earnings growth and a rock-solid economy amidst the Federal Reserve’s interest rate adjustments.”
Despite the upbeat sentiments, there is a cloud of doubt looming over the market’s elevated valuation. Kevin Gordon, senior investment strategist at Charles Schwab, expressed reservations about the stretched trailing 12-month price-to-earnings ratio, cautioning:
“This would suggest that the bull might be aging or approaching the twilight of its existence.”
However, the perceived vulnerability is not overtly reflected in the recent historical trajectory of the S&P, keeping market observers guessing about the road ahead.
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