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Many of our fast-growing, innovative companies performed well over the first three quarters of 2024 as markets sustained momentum on optimism over global economic resilience and the potential for more accommodative monetary policies from the world’s central banks. On a year-to-date basis through the end of Q3, the LOM Innovation and Opportunity Fund rose by 12.24% and for the latest one-year period the fund increased by 27.16%.
The global economic outlook continued to stabilize in Q3 despite increased uncertainty in the geopolitical landscape. Most economists expect the global economy to grow modestly over the next year while anticipating lower inflation levels which will allow the Federal Reserve to reduce the federal funds rate and support an ongoing economic expansion of around two percent for both the second half of 2024 and for 2025.
Global equity markets continued to move higher through Q3 with the loosening of central bank policy providing a catalyst for new highs achieved. The S&P 500 gained 5.53% through the quarter but the dispersion of market performance was highlighted with the S&P 500 Equal Weighted Index appreciating 9.09%. Rotation was further emphasized in sector performance, Utilities (+18.47%), Real Estate (+16.29%) and Industrials (+11.15%) led the way, recovering from respective underperformance versus the market in the first half.
The outperformance of traditionally higher yielding sectors drove the previously shunned Dow Jones Dividend Select Index up 13.13% across the quarter. Information Technology (+1.44%) was a laggard across the period but remains the top sector year-to-date, returning 29.63% against a market up 20.81%. Global markets were softer than the US in local currencies but weakness in the greenback meant they outperformed when rebased into local currencies. Stronger non-US markets included Japan’s Nikkei 225 (+7.66%), the UK’s FTSE100 (+6.96%) and the Eurostoxx 50 (+6.29%).
In this environment, we continue to favor innovative companies which offer attractive growth prospects. Some our themes include the rapid development 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.
