Despite some dire predictions 12 months ago, 2023 turned out stronger in the end for most investors, despite several scares, including the collapse of several US Regional Banks, higher interest rates, a war in the Middle East and of course, ongoing inflation. On that last point, by November 2023, we had some encouraging signs that inflation will be back below 2% in most developed countries this year. And that set the market alight with a strong rally to finish the year.

Some notable callouts for our funds performance in 2023 were the Pie KiwiSaver Growth Fund up +17.1% pre fees. The Pie Australasian Growth Fund up +25.2%, and the Pie Conservative Fund up +8.8%, which had a record year, being the highest return of the fund (both after fees).

At the end of 2022, investors thought a recession was definite. The year before (2021), they thought big tech would be immune to rate increases. And a year before that (2020), they were convinced that paying high prices for stocks popular during COVID would make them rich. These were the consensus calls and they all failed.

So where is consensus now?

To start 2024 investors believe, again with absolute conviction, that the economy is heading for a soft landing with lower interest rates finally on the horizon. Maybe this time they will be right. In theory, this environment should be positive for markets, although it’s no surprise that after a multi-year bear market, nobody is that bullish or willing to stick their neck out.  The average forecast gain for 2024 by Wall Street strategists was essentially zero (the usual average is around 8-10%).

What do we think at Pie?

Here goes with the crystal ball………

• Healthcare – has underperformed due to the GLP-1 (weight loss drug) movement which we believe will fade.  It’s also a defensive sector, so handy to own if economic growth slows down more than expected.
• Small Caps – the herd is only just moving back into small caps, so we believe this trend has a long way to go. 
• Real Estate – despite a year end bounce, many listed property trusts are still trading at a steep discount to their Net Assets.
• Rates  - we expect all major Central Banks, including the RBNZ to cut rates this year. The question is just by how much. With a soft economic landing, it should be around 1%, but if there is a recession, rates could be cut by 2.5-3%. Either way, rates are coming down. 

Get in early, make your money, then get out.

Risks to watch out for?

• Oil price spike from Middle East war expanding.
• Disruption/tension around the US election and the results.
• Weather events such as droughts impact food prices and growth.
• Cyber attacks.
• And on that note. Happy New Year everyone! A new lap begins…. Good luck ahead.

Thank you again for your support. If you have any questions, please don’t hesitate to email me on
[email protected]

Founder and Chief 
Investment Officer