Global stocks nervously edged higher this October, traditionally a volatile month for markets. The United States (US) elections took centre stage, with a notable shift as markets moved from pricing in a Democratic victory to anticipating a Republican win under Donald Trump.
This outlook has pushed interest rates higher, as Trump is expected to pursue substantial fiscal stimulus. His policies - cutting taxes and raising tariffs - are perceived as inflationary. Key beneficiaries of these market movements include Big Tech, banks, gold, and Bitcoin. NVIDIA (NVDA) hit another all-time high, while gold has surged over 34% year-to-date in USD terms, marking its strongest year since the late 1970s.
Closer to home, our Australasian Funds had another stellar month. The Growth Fund and Emerging Companies Fund delivered returns exceeding +4%, bringing their 12-month returns to 33.3% and 42.2%, respectively.
We expect November to be an active month, with portfolios likely experiencing swings as the US election results unfold. Additionally, our team is on the road for the first two weeks of the month, meeting with clients and KiwiSaver members. We have some great content on AI, Innovation, and how we integrate these themes into our portfolios; it’s an excellent opportunity to connect with the team managing your investments. Despite being in a virtual world, you can’t beat face-to-face contact in my opinion. If you haven’t been able to attend, keep an eye on your inbox for a recording of the presentations.
Later this month, I’ll be making a brief visit to mainland China to explore new investment opportunities. Having travelled to Hong Kong many times, this will be my first trip to the mainland, and I look forward to sharing insights from the ground in next month’s update.
STOP PRESS:
The US election has been won by the Republicans in an (unexpected) landslide victory, with Donald Trump set to return to the White House in 2025 for a second term as US President. The market initially had some wild moves in anticipation of the policies that were discussed by Trump on the campaign trail. Briefly, this includes higher tariffs, lower corporate taxes, a repeal of parts of the Inflation Reduction Act, cutting income taxes, deporting overstayers, lower immigration, reducing regulation, and bringing manufacturing back to the US, to name but a few!
These policies, if enacted, will have far-reaching consequences. They are very much “America first”. So far, we have seen bond yields higher on concerns of overheating the economy and tariffs are a tax on the consumer (a bit like adding GST), therefore inflationary. US big tech, bitcoin, banks and small caps have been strong, with the rest of the world actually falling on the news. While these developments are significant, it's crucial to note that the real impact will depend on which of these campaign promises become actual policy. We'll be closely monitoring how these policies evolve and their influence on global markets in the months to come.
Warm regards,
Mike Taylor
Founder & Chief Investment Officer
Information is current as at 31 October 2024. Pie Funds Management Limited is the manager and issuer of the funds in the Pie Funds Management Scheme and Pie KiwiSaver Scheme (the Schemes). Any advice is given by Pie Funds Management Limited and is general only. Our advice relates only to the specific financial products mentioned and does not account for personal circumstances or financial goals. Please see a financial adviser for tailored advice. You may have to pay product or other fees, like brokerage, if you act on any advice. As manager of the Schemes’ investment funds, we receive fees determined by your balance and we benefit financially if you invest in our products. We manage this conflict of interest via an internal compliance framework designed to help us meet our duties to you. For information about how we can help you, our duties and complaint process and how disputes can be resolved, or to see our product disclosure statement, please visit www.piefunds.co.nz. Please let us know if you would like a hard copy of this disclosure information. Past performance is not a guarantee of future returns. Returns can be negative as well as positive and returns over different periods may vary.