Against all odds? Investment markets punch out strong returns amid share market bounce

2023 was a remarkable year for investment markets. Mercer’s 2023 Periodic Table shows a bounce back of 11 out of 16 asset classes into the positives and a notable percentage increase on most asset class returns compared to the previous year.

Monday, June 17th 2024, 3:22PM

A study of the table, with its patchwork quilt of market results, quickly highlights how hard it is to divine patterns, let alone predict what might happen this year. Whether the firmest of contrarians, bursting with unfailing optimism, or more likely somewhere in between, there is bound to be something in the Periodic Table that makes you pause and reflect.

The table, which is produced each year, colour-codes 16 major asset classes and ranks how each performed, on an annual basis, over the past 10 years. The myriad returns generated by markets over time underscores the challenge of discerning patterns and forecasting what may eventuate in the periods ahead.

Some of the outcomes from last year and the decade as a whole:

· 2023 was the year of Global Equities. Whether on a currency hedged (+23%) or unhedged (+24%) basis, the sector surpassed nearly all expectations and proved unbeatable. The Technology sector, in particular, was the place to be, with the US NASDAQ Index rising a startling 45%.

· 2023 was another year of wide dispersion between “growth” and “value” style stocks. Aided by the strength of the technology sector, there was a return difference of 25% in favour of global growth companies.

· Global Small Cap Equities (+16%) was another example of a sector bouncing back into favour. The sector joined its Equity market counterparts in the top half of the Table over the decade as a whole.

· The gloves were off for the trans-Tasman battle of the share markets, but it was convincingly won by Australia in 2023 with that market up 13% compared to a more pedestrian 4% closer to home. All is not lost for longer-term domestic investors, however, as the New Zealand market outpaced Australia by an average of 3% per annum over the decade as a whole.

YOU CAN DOWNLOAD A COPY OF THE TABLE and ACCESS AN INTERACTIVE VERSION HERE

Tags: Marsh Mercer