Los Angeles, USA – Global equity markets saw continued growth in the first quarter of the year, with the MSCI ACWI Index rising by 8.20%. However, the Bloomberg Global Aggregate Bond Index experienced a decline of 2.08%. Over the quarter, value stocks lagged behind growth stocks, with the MSCI ACWI Value Index falling 2.65% compared to the MSCI ACWI Growth Index. Japan and North America performed well, while Latin America and Asia/Pacific ex-Japan saw negative returns. Information Technology, Communication Services, and Energy sectors saw the most growth, while Real Estate was the only sector to decline.
Economic conditions varied by region, with developed countries reporting slowing inflation rates. The UK and US reported annual inflation approaching 3%, while the Eurozone recorded a rate of 2.6%. Central banks in these regions maintained steady monetary policies, hinting at possible rate cuts in the future as they work towards a 2% target. In Asia, Japan raised interest rates for the first time in over a decade, marking the end of its negative rates regime. Conversely, China lowered its loan prime rate to stimulate its struggling economy.
Geopolitical tensions persisted, with conflicts escalating in the Middle East and Eastern Europe. Russia made advances in Ukraine, causing concern for further escalation. In Europe, the US partnered with South Korea and Turkey to support Ukraine with ammunition and supplies. Company performances varied, with Adobe facing challenges from new competitors, Sony adjusting its PlayStation 5 sales expectations, Martin Marietta Materials benefiting from strategic acquisitions, and Munich Re demonstrating strength amid global crises.
The portfolio saw underperformance relative to the MSCI World Index, primarily due to security selection and allocation effects. Regionally, North America and Japan detracted the most from performance, while Europe and an overweight in Japan contributed positively. Despite challenging economic data and geopolitical uncertainty, the focus remains on individual companies with sustainable qualities for long-term growth. No new purchases or sales were made during the quarter, reflecting a long-term investment strategy.
