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1. How did the Cantor Multi-Asset Funds perform in 2023?
The Cantor Fitzgerald Multi-Asset Funds continued their solid track record, being the best performing Multi-Asset Range in the Irish market in 2023.
| 2023 Return1 | Position vs peers 20232 | Position vs peers 5 Years2 | |
|---|---|---|---|
| Multi-Asset 30 | 14.9% | 1 | 1 |
| Multi-Asset 50 | 19.8% | 1 | 1 |
| Multi-Asset 70 | 24.5% | 1 | 2 |
Warning: Past performance is not a reliable guide to future performance.
2. What were the drivers of this strong fund performance?
We began 2023 with a very positive outlook for asset markets, driven by our view that recession fears were overblown, inflation would continue to recede, and the headwinds facing consumers would be offset by policy-driven investment spending. The funds were at the top end of their asset allocation range for much of the first quarter, delivering very strong returns.
Over the summer, however, markets faced several headwinds. A banking crisis in the US in March didn’t prevent a continued hawkish narrative from central banks. Additionally, fears of sticky inflation and recession and a disappointing reopening in China meant the balance of risks was skewed to disappointment after such a strong quarter. We, therefore, reduced risk substantially, towards the lower end of the range for growth assets, investing in short-dated European treasury bills where yields had become attractive.
We maintained this position over the summer as bond yields rose dramatically, although the rise in bond yields didn’t materially move equity markets, which went violently sideways. As we entered Q4, many potential headwinds facing markets had dissipated – the economy remained strong, inflation continued to fall, central banks began pivoting to a more dovish stance, valuations were more attractive, and earnings estimates were inflecting. We increased our exposure to longer-dated bonds and moved to the upper end of the range for growth assets.
3. What’s your outlook for 2024 and the Funds’ resultant positioning?
The beginning of 2024 sees developed equity markets at or near their all-time highs. Economies are at full employment, with workers now beginning to see real wage growth as inflation subsides quicker than recent wage increases. That this has been achieved against a backdrop of 2 years of unprecedented rate hikes and despite the most distressing geopolitical events in the last half-century should give investors cause for comfort. That it has been achieved ahead of an impending rate-cutting cycle should provide investors with cause for optimism. The news cycle for 2024 will undoubtedly be filled with the challenges of the upcoming political cycle in the US and the UK and perhaps even closer to home, but for markets, the monetary policy cycle will ultimately trump the political theatre. Investment into cyclical parts of the economy that have been lagging over the last two years will reaccelerate. The momentum in the structural growth areas of economies, namely digitalisation and decarbonisation, will be at least sustained and potentially even turbocharged. CFAM enters the year with their Multi-Asset Funds fully invested at the upper end of our asset allocation ranges, having increased exposure to equities and bonds in late October (reversing the cautious positioning we had maintained for much of the summer). Positioning in equities is spread across long-term structural investment themes and shorter-term value opportunities.
1. Source: Longboat Analytics to 01 January 2024 based on calendar year returns. The returns quoted include the reinvestment of net income and are net of trading costs, but before deduction of annual management charges and other insurance contract charges and as such do not represent the returns on insurance contracts linked to these funds. Details of all charges for a particular product are available on request.
2. Included in the Multi-Asset peer group are ILIM, New Ireland, Zurich, Aviva, & LGIM.
| Warning: Past performance is not a reliable guide to future performance. Warning: The value of your investment may go down as well as up. Warning: The income you earn from this investment may go down as well as up. Warning: If you invest in these funds you may lose some or all of the money you invest. Warning: These funds may be affected by changes in currency exchange rates. Warning: If you invest in a pension, you will not have access to your money until you retire. |
