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Many of our fast-growing, innovative companies and small cap opportunity positions performed well over the course of 2024 as markets sustained momentum on optimism over economic resilience and the potential for more accommodative monetary policies from the world’s central banks. For the 2024 year, the LOM Innovation and Opportunity Fund rose by 12.57%.
The US economy demonstrated continued resilience in the fourth quarter of 2024, reinforcing the narrative of a successfully engineered “soft landing” with no imminent signs of a recession. Gross Domestic Product (GDP) expanded at an annualized rate of 2.7% in Q3 and is projected to grow at a slightly moderated pace in Q4. The labor market continued to show strength, adding 227,000 jobs in November, with the unemployment rate steady at just above 4.0%.
US equity markets delivered mixed results in Q4. The quarter began on a strong note, buoyed by mega-cap stocks and optimism following the election of President-elect Donald Trump on November 6. However, sentiment shifted sharply on December 18 when the Federal Reserve’s rate cut announcement signaled a “higher-for-longer” interest rate environment. The S&P 500 dropped 2.95% on the day, yet managed a quarterly gain of 2.07%. In contrast, the S&P 500 Equal Weighted Index fell 1.89%, highlighting significant market performance dispersion.
Globally, the MSCI World Stock Index posted a marginal decline of 0.41% for the quarter. Within the broader markets, sector rotation was pronounced. Consumer Discretionary (+14.25%), Consumer Staples (+8.87%), and Financials (+7.06%) led gains, driven by expectations of tax cuts and deregulation under the incoming administration. The Nasdaq 100 rose 6.36% in Q4, fueled by mega-cap outperformance. For the year, Consumer Services outpaced Information Technology as the top-performing sector, gaining 40.23% versus 36.61%, with the broader market up over 20% year-to-date.
In this environment, we continue to favor innovative companies offering attractive growth prospects. Some our themes include the rapid adoption and deployment of artificial intelligence (AI), cyber security, healthcare innovation and the ubiquitous migration of data to the cloud. Meanwhile, our small cap value selection process continues to find overlooked and underappreciated opportunities across several key market sectors.
The information contained in this article is for information purposes only, and represent the views of the author. It is not intended as specific investment or financial advice, or a recommendation or solicitation to buy or sell any security. Any investments or strategies listed in this article may not be suitable for all investors. Past performance is not indicative of future performance, and as with any investment, prices may fluctuate. It is recommended that advice is sought from a qualified investment professional prior to implementing any financial plan. LOM has made every effort to ensure that the contents herein have been compiled from sources believed reliable, however LOM does not warrant the accuracy, adequacy, timeliness, or completeness of this information expressly disclaims liability for errors or omissions in this information.
