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Global Equity Income Portfolio: December 2023

Global equity returns continued to be positive in December with the FTSE All World Index (USD) climbing +4.8%. Inflation has fallen faster than had been expected in several western economies. This has heightened expectations for rapid cuts to central banks’ interest rates during 2024. Mid-month the Federal Reserve’s own policy projections indicated substantial rate cuts to come. With the global Index now just 4% below the all-time end of 2021 high, the fears of “higher for longer” that surrounded the market sell off in the summer seem long forgotten.

The equity market rally has been relatively narrow and dominated by a small handful of technology companies. These firms generally continue to enjoy increasing growth forecasts. Such growth is becoming increasingly tricky to find.

Trading activity

During the month, the Ashburton Global Equity Income Model Portfolio (USD) returned +2.3%. The best performing holdings were the Asia Pacific High Dividend ETF (+10.3%), Legal & General (+10.3%) and JP Morgan (+9.0%). While the worst were Diversified Energy (-14.3%), BAT (-5.6%) and BP (-2%).

2024 will be another huge year for geopolitics, with a record number of elections being held globally. Inflation remains among the most important variables for investors to watch given it tends to drive the central bank decision makers who raise or lower global liquidity levels, which affect investment markets. We continue to look for reasonably priced quality companies who are compounding their intrinsic value and offering above market growth rates.