This year has been one of the most explosive in the market, with assets that exceeded all expectations. If you were wondering who is leading the year, here is the answer.
Bitcoin is leading the way this year, and that pattern has been repeated in 11 of the last 14 years. This year in particular, growing institutional adoption and the entry of large investment funds into the crypto market have helped boost its price, despite its high volatility.
Gold, through the GLD ETF, continues to demonstrate its great fundamentals: safe haven asset, good performance in the face of falling interest rates, record demand from central banks, low correlation with the rest of the traditional assets.
Growth ETFs, such as the IWF, invest in companies with high expectations of future growth. In a year dominated by the technology sector and especially semiconductor companies, the IWF has achieved an impressive return of 25%. These companies typically reinvest their profits rather than pay dividends, in the hope of expanding their market value over the long term.
- US Large Stocks (SPY): +22%
The SPY, which tracks the S&P 500, is the world’s most popular ETF and is comprised of the 500 largest U.S. companies by market capitalization. These companies span a wide variety of sectors, from technology to healthcare and consumer. It is currently at an all-time high.
- US Nasdaq 100 (QQQ): +20%
QQQ remains the benchmark for those looking to invest in big tech. With a return of 20% in 2024, this ETF, which tracks the Nasdaq 100 index, was driven by the boom in sectors such as artificial intelligence, software and, obviously, semiconductors.
The IWD ETF invests in “value” stocks, i.e. companies that are fundamentally undervalued relative to their market value. With a return of 15%, this ETF had a good year, benefiting from the return of capital flows to more traditional sectors such as finance and industrials that lagged behind the tech rally.
Finally, the VNQ ETF, which invests in Real Estate Investment Trusts (REITs), has returned 12% in 2024. This type of asset is usually attractive to investors looking for regular income through dividends, and this year was no exception, as they benefited from that and, mainly, from the drop in interest rates.
While tech stocks and cryptocurrencies dominated the outlook, traditional assets such as gold and real estate also proved resilient.
Furthermore, this ranking only shows the cumulative return. What is truly important in an investment portfolio is the risk-adjusted return. In this context, the star of the year is undoubtedly gold, considering that it has a third of the volatility of Bitcoin.
Is there anything more bullish than gold today? It’s hard to find.
Let’s look at its weekly chart:
Gold remains an attractive investment for several fundamental reasons. Its price is closely tied to the real interest rate, which adjusts the nominal rate for inflation. When real rates fall, gold tends to rise as investors seek alternatives to lower-yielding Treasury bonds. Currently, the 10-year rate has declined sharply, pushing gold to a new all-time high.
Furthermore, the continued rise in US Treasury debt and the lack of clear solutions to the deficit may put further upward pressure on the value of gold.
Another relevant factor is the accumulation of gold by central banks at record levels, which reinforces its attractiveness as a safe asset. As if that were not enough, gold historically acts as a refuge in times of global uncertainty, including war conflicts.
As always, it is important to diversify. But, without a doubt, any investment portfolio should (long ago) have a certain portion in gold.
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Note: The material contained in this note should NOT be construed in any way as investment advice or a recommendation to buy or sell a particular asset. This content is for educational purposes only and represents only the opinion of the author. In all cases it is advisable to seek professional advice before investing.
Source: Ambito
I am an author and journalist who has worked in the entertainment industry for over a decade. I currently work as a news editor at a major news website, and my focus is on covering the latest trends in entertainment. I also write occasional pieces for other outlets, and have authored two books about the entertainment industry.
