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Some stronger returns lead us into 2024

The past year has brought some relief for patient long-term investors with stronger returns emerging particularly in recent months from markets relieved that inflation is receding. 

Interest rate rises, whilst a blunt tool to cure inflation, have proven effective. Indeed, we can take some comfort that whilst high interest rates have imposed pain on the economy, this process has demonstrated to us that the policy which is supposed to keep the global economy working does in fact broadly work. 

Many have spent much of the past year worrying that inflation would run away to 1970s levels and claiming central banks would fail in their efforts. The key lesson, though, is that a long-term perspective, faith in fundamentals, and transparency from policymakers ultimately pays off. 


  • Portfolios have shown strong returns in the final quarter of the year as both bonds and equities rallied. Our allocation to US equities as well as government and corporate bonds helped portfolios outperform benchmarks over 2023.  

  • World equities gained 16.63% last year, with US and European equities advancing 18.28% and 13.42% respectively. UK large caps lagged, with the FTSE 100 up just 6.47% last year. UK mid-caps have rallied 10.4% over the past 3 months. Asian indices lagged in 2023 as continued economic weakness impacted investor sentiment.  

  • In fixed income, UK Government bonds finished 2023 roughly flat, with bond interest payments accounting for the bulk of the return last year. Falling inflationary pressures have fuelled market predictions that central banks will embark on interest rate cuts in 2024 which could help bond prices recover.  

  • Global high yield debt was up 13.72% last year, aided by strong gains over the past quarter. High yield debt has rebounded as concerns surrounding a deep recession in the US have been allayed.  


  • We rebalanced portfolios in the fourth quarter and used the opportunity to add to high yield debt and active funds in Asia and Japan. 

  • We introduced an active fixed income allocation which alters its sensitivity to bond yields based on inflation signals.  

  • We reduced portfolio allocations to gilts, global infrastructure, and Asian equity index funds.   

The economic outlook remains a source of concern for investors as we enter 2024. Manufacturing surveys are pointing to slowing growth and labour markets are starting to weaken. However, monetary conditions are likely to continue to ease in the second half of the year. Still, corporate profits face growing risks in the interim. 

We remain optimistic that the backdrop provides opportunity for stronger recent returns to continue as bond yields settle and corporate profitability stabilises.  

We are also excited by elevated expected returns while recognising risks remain. We take a balanced approach - keeping high quality anchors that participate in rallies, while gradually rotating into beaten-down assets as data improves.  

Asset Class Performance:

Source – Bloomberg – GBP Total Return % - 31.12.2023

Source – Bloomberg – GBP Total Return % - 31.12.2023


Past performance is not a guide to future performance 


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