For the last 25 years I have organized investment forecasting games in the office. Usually, around 60% of participating colleagues are on the right side of the market. This year has been exceptional, as the vast majority of participants have underestimated the strength of the markets. The S&P 500, Chinese equities, Magnificent Seven stocks and credit spreads have all performed much better than was anticipated at the beginning of the year. The number of risks seemed endless: market concentration, highly valued technology stocks, prolonged inflation with a Fed behind the curve, China in the doldrums, just to name a few. Who would have expected one of the strongest equity markets of this century, with almost 30% return [MSCI World in EUR on 16 December] at the time of writing? Stanley Druckenmiller’s investment adage was once again proven true: it’s liquidity that moves markets. Particularly so when the real economy has a limited number of projects to absorb the (excess) capital.

Luckily, our Fundamental Equity teams looked beyond the risks and captured opportunities across the spectrum. The Global Stars team kept the foot on the pedal of large-cap technology stocks and benefited from the AI-powered rally. That took courage; good value is not always to be found in cheap stocks. At the same time the team invested in multiple other successful companies, such as Trane Technologies, Deutsche Telecom and Paypal. The performance record of the Global Stars strategy relative to the benchmark is very strong over a 1-, 3-, 5- and 10-year horizon, and we welcomed numerous new clients over the course of 2024. The portfolio positioning looks promising for 2025.

Emerging markets are up a healthy 15% year-to-date. The strong relative performance of our Asia-Pacific strategies is particularly worth noting. We are expanding the team to research the next wave of great stock opportunities. While emerging market returns may seem a bit pale compared to those in developed markets, Wim-Hein Pals explains in his outlook that there are plenty of good prospects across the various regions for 2025, at exceptionally low valuations. We believe there is a good chance that sentiment toward emerging markets may change after the new US administration takes over, when the discussion around tariffs will likely shift from threats to deals. We are completing our 2024 campaign ‘30 years of investing in Emerging Markets at Robeco’ with positive expectations.

With liquidity still abundant, best wishes for successful investments in 2025!