Vector 2024 Semi-Annual Review

30 Jun 2024

Dear Investors,

The start of 2024 has been strong for developed markets, with significant returns as the economic gains from the first quarter carried into the second. At first, there were worries about ongoing inflation and whether central banks would cut interest rates, but these concerns lessened as the second quarter went on. This period, much like 2023, has been marked by a market driven largely by a few big, high-priced stocks.

Artificial intelligence companies have notably outperformed the broader market. As a result, the technology sector and the United States, where many of these AI companies are based, saw significant returns. This trend has also benefited investment strategies focused on Growth and Momentum stocks, which have continued their strong performance from 2023 into 2024.

In China, government actions to support the real estate sector have boosted the Chinese stock market. Combined with strong results from the Taiwanese market due to its AI connections, Emerging Asia delivered impressive returns in the first half of the year.

In 2024, growth stocks have once again outperformed value stocks, while interest-rate-sensitive low volatility stocks and smaller companies have not yet made a significant recovery. As a result, Europe, with its higher concentration of value-focused smaller companies and sectors, has lagged behind other developed markets.

Our focus on smaller, value-oriented companies and a cautious approach to growth investments have continued to present challenges into the first half of 2024. Vector Navigator achieved a respectable return of 9.52% so far. Although this is below its value-weighted benchmark, it is commendable compared to an equally-weighted approach, which has once more significantly underperformed the value-weighted benchmark. Vector Flexible, which hedged against market risks, earned 2.47% year-to-date.

Kind regards,
Werner, Thierry & Nils