2024 Investments Review

2024 has been another very strong year for investment returns. The Australian share market, measured by the S&P/ASX 200 Accumulation Index, has returned +14% as of mid-December. Global markets, measured by the MSCI World ex Australia Total Return (AUD) Index have returned +31%.

Interest rate cuts are underway around the world, although Australia is one of the few exceptions. This is partly because our interest rates didn’t get as high in the first place and our economy is growing strongly. Current expectations are for Australia to deliver its first interest rate cut in April 2025 and a total of 3 cuts for the year, although we would caution investors that we will be unlikely to see such cuts unless the economy worsens considerably. There is a reasonable probability that the RBA will continue to do nothing until they are forced to act.

Within the Australian share market, one of the most significant takeaways was the outperformance of bank shares, none more topical than Commonwealth Bank (CBA) which has returned approximately +45% including dividends for the year to date. This rally led CBA to leapfrog BHP and be firmly positioned as the largest listed company in Australia.  

BHP has had its own struggles. A number of red flags have circled the Chinese economy during the year – rising youth unemployment, an over-leveraged property market, and more recently the impact of Donald Trump’s impending tariffs. These concerns have contributed to a fall in the price of iron ore – of which China is a significant consumer and a key customer for BHP – whose share price has fallen by approximately -19% during the year.

As always, the question is ‘Where To From Here?’

We are cognisant of the fact that markets have had a great run and appear expensive on a headline level, but under the hood, there is quite a bit of dispersion within the market. We are excited about some of the opportunities we are finding to invest in high quality companies at multi-year valuation lows, contrasted by taking profit in expensive companies that have gotten ahead of fundamentals, this market dynamic favours active portfolio management and we are confident that we can continue to add value for our clients in 2025 and beyond.

We would like to thank our clients for their ongoing support and look forward to staying connected in the new year.