If 2025 delivers even half the success of this year, then there is much to be optimistic about for True Potential clients. Year-to-date, global markets have performed strongly, particularly MSCI (an American finance company and brand name of Morgan Stanley Capital International) World Equities which returned over 24%* in Sterling terms. Notably, our Defensive Portfolio has returned 5.7% and the Aggressive Portfolio has returned 15.4% year-to-date as of 30/11/2024 – comfortably outpacing cash and inflation this year.
The Defensive Portfolio includes an Ongoing Charge Figure of 0.66% and our Aggressive Portfolio includes an Ongoing Charge Figure of 0.7%. Both Portfolios do not include entry or exit charges.**
Below is a table showing the five-year performance.***
*MSCI world index available here – return figure accessible by clicking ‘Performance’ tab.
** OCF figures confirmed from True Potential Portfolio factsheets.
***Data sourced from True Potential Investments. Portfolio performance data as of 30/11/2024 and figures accessed on 17/12/2024.
***Performance is calculated on a Total Return basis and is net of Portfolio OCF. Performance information covers preceding 5 years and is based on complete 12-month periods.
Past performance is not a reliable indicator of future results.
It’s important to remember that, as with all investing, your capital is at risk. Investments can fluctuate in value and you may get back less than you invest.
Looking Ahead
The most remarkable trend has been falling inflation alongside steady global growth. UK inflation (CPI) dropped significantly from over 10% last year to ~2.5%, exceeding Bank of England expectations and leading to modest interest rate cuts. The US followed a similar path, with inflation easing to 2.75%, all be it the Federal reserve had expected a larger decline this time last year.
Remarkably, this inflation decline was not triggered by a recession – in fact, the US economy added 2 million jobs this year alone. Not since 1952 has inflation declined by so much and economic growth in the US continued.[1]
Market Drivers and AI Surge
The stock market boom has been driven by several factors:
- Falling inflation
- Government spending: US fiscal deficits reached 6.4% (~$1.8 trillion), while UK borrowing stayed high at ~5% of GDP.
- AI revolution: Companies like Nvidia led a profits “super-cycle,” with Nvidia’s share price up 268%. Closer to home, NatWest saw a surprising 184% gain, despite minimal UK media coverage. The Natwest share price is now at a 10 year high.
Stock markets thrived even where economic growth lagged – Germany’s DAX (a stock index that represents the 30 biggest German companies that trade on the Frankfurt Exchange) rose 22%, despite the economy contracting.
Political Uncertainty and Global Elections
2024 has been defined by political change. Nearly 3 billion people across more than 60 countries exercised a democratic right to vote and the desire for change was explicit. Across the G20, elections took place in major economies including the US, UK, India, and Japan. Only India’s Modi and South Africa’s Ramaphosa retained power, though both lost their parliamentary majorities.
Across Europe, challenges persisted:
- UK: The weakest economic recovery since the second world war.
- Germany: No economic growth since prior to COVID and the collapse of a coalition Government.
- France: Repeated political upheaval following failed austerity reforms and four Prime Ministers in one year.
And in the US, Donald Trump became only the second President elected to serve a 2nd, non-consecutive, term. For amateur historians, the first was Grover Cleveland in 1893.
Looking Ahead
Despite this uncertainty, the IMF projects global growth will rise modestly from 3.2% to 3.3% in 2025. However, escalating trade tensions and shifting policies – particularly driven by a returning President Trump, could add further uncertainty in the year ahead.
With investing, your capital is at risk. Investments can fluctuate in value and you may get back less than you invest.
This material is not a personal recommendation or financial advice and the investments referred to may not be suitable for all investors.
Opinions, interpretations and conclusions represent the views of True Potential Investments at the date of publication and are subject to change. Forecasts are not a reliable indicator of future results.
True Potential Investments LLP is authorised and regulated by the Financial Conduct Authority. FRN 527444. Registered in England and Wales as a Limited Liability Partnership No. OC356027.
True Potential LLP is registered in England and Wales as a Limited Liability Partnership No. OC380771.
[1] 1952 – Average showed a 6% decline compared to the 1951 average
and;
https://countryeconomy.com/gdp/usa?year=1952
1952 also saw 4.1% GDP growth
