2024 – a year of growth for investments

What did 2024 bring in terms of growth for investments?

The global market outlook showed an improvement in 2024, with the US achieving more than 20% returns for a second consecutive year.

This table compares changes across key global indices and puts the UK, as represented by the FTSE 100, in a relatively poor light. Figures suggest that the government has its work cut out persuading pension funds to divert more of their capital to UK companies, rather than to the US stock market. However, there are nuances that a simple annual performance table misses:

• The level of dividends on the UK stock market is generally higher than in other markets. This normally does not show up in index performance tables, as most indices only measure capital growth. Add in dividends and the total return on the FTSE 100 in 2024 was a more respectable 9.7%.
• The US stock market, as measured by the S&P 500, produced another powerful performance in 2024. Much of that was due to the ‘Magnificent Seven’ technology shares – Amazon, Apple, Alphabet (aka Google), Meta, Microsoft, Nvidia and Tesla. Together, those seven companies account for about 1/3 of the value of the 500-company S&P 500. The significance of the ‘Magnificent Seven’ becomes apparent when an alternative version of the S&P 500 is considered which gives every company the same index weight – then the ‘Magnificent Seven’ becomes just 1.4% of the index. In 2024, that equal-weighted index grew by 10.9%, not 23.3% of the main index.
• Often overlooked in index tables is the effect of currency – indices are normally quoted in local currencies. So while the Euro Stoxx 50 appears to have outperformed the FTSE 100 in 2024, that is not the case if you are a sterling-based investor. Over the year, the euro fell 4.4% against the pound, more than enough to counter the higher euro-based index growth. It’s a similar story for Japan, where the strong performance of Japanese shares was pared back by an 8.7% decline in the Japanese Yen against the pound.

What this shows is that looking at 2024, diversifying your investments across global markets makes sense.

The above was provided by Hartey Wealth Management Limited. Registered office: Hilliards Court, Chester Business Park, Chester, CH4 9QP.

Tel: 0808 168 5866. www.harteywm.co.uk

Hartey Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.