Markets’ Review for 2024 and the way forward – Month in Review: December 2024
Macroeconomic Environment Review
The US dollar surged by 7.0% on a DXY basis in 2024 after a 2.3% drop in 2023. It was the third year in four when the dollar advanced by over 5.0%. All of the dollar strength in 2024 came in the final quarter of the year as market participants positioned for a Trump election victory. Confirmation of that victory and comments from Trump since have raised expectations of trade tariff announcements on the day of inauguration or in the days immediately after. We expect trade tariffs to be the focus and market expectations will not be disappointed with much more widespread action from the start than in Trump’s first term in office. However, policy remains restrictive and beyond this period (Q1 into Q2) we see the economy slowing and the Fed cutting rates further following a pause that could feasibly last through to May. Slower growth and a more active FOMC in cutting rates in H2 should then see the dollar partially reverse the dollar strength recorded since Q4 last year.
2024 was another impressive year for risk assets. Continued US strength helped developed market equities deliver total returns of 19.2%. Looking ahead to 2025, we should question whether the same drivers of performance will remain in play. Our view is that US will likely continue to outperform, but that the AI story will start to broaden, and opportunities will extend beyond mega-cap tech. However, US equity markets are at lofty valuations and credit spreads are near record tights. Given this, we may wish to consider how comfortable we are having all our eggs in one basket.
Monthly Performance Review
During December 2024, AENAON Systematic Strategies generated the following total returns:
Across the spectrum of our benchmark indices, our strategies’ performance during December was rather positive. As a comparison, the US S&P 500 equities index lost 2.38%, the Barclay Hedge Fund Index declined by 1.41%, the Barclay CTA Index gained 0.24% while the other benchmark indices can be seen on the chart below.
Chart 1: Monthly Performance vs. Benchmark Indices – December 2024
Charts 2, 3 and 4: Inception-to-Date Performance vs. Benchmark Indices
You can always review our updated factsheets at the following Fundpeak links, with monthly performance updates and statistics since inception:
