September 2024: Calm after the storm

• Slight rise in September
• Interest rate cuts in Europe and the US
• Conflict in the Middle East

Slight rise in September

 August was a whirlwind, but the stock market remained calm in September. Most stocks went up gradually and the Peaks portfolios gained +1.7% (Cautious) to +1.9% (Adventurous). Since the beginning of the year, Peaks portfolios have increased in value by +5.5% to +12.9%. That makes 2024 a very good stock market year so far.

Table 1: Net return Peaks portfolios

Good to know: here you can see the net returns of Peaks portfolios in September 2024, all of 2024 and since the start of Peaks after deducting Peaks, fund and transaction fees. The value of your investments may fluctuate. Past performance is no guarantee of future performance.

Above you can see the return of a €10,000 portfolio. This does not include deposits or withdrawals. If you have deposited or withdrawn money this month, your return will look different from the one shown here. Your personal return also differs if you have invested less or more than €10,000, because of the monthly fees Peaks charges.

The relative stock market tranquillity is also reflected in volatility levels this month. Volatility in September was lower than the average since Peaks started (10.2% versus 12.2%). All of 2024 is lower than the historical average.

Table 2: Risk (volatility) of Peaks portfolios

Good to know: here you can see the risk of the four Peaks portfolios over different time periods (last month, this year and the average since Peaks started). Risk reflects the variation in returns on an annual basis and is also known as ‘volatility’. Risk is measured by converting the standard deviation of the net daily returns of the Peaks portfolios to an annualised basis.

Interest rate cuts in Europe and the US

On the economic front, there were few surprises in September. The central banks of Europe and the US cut interest rates as expected, by 0.25% and 0.5% respectively. Inflation eased and figures indicated that the global economy is cooling. For that reason, interest rates can come down; that is good for economic growth. This is because lower interest rates make it more attractive to invest rather than save, and it becomes cheaper for consumers and companies to borrow money - for example, to buy a house or machinery.

The interest rate cut was also positive for the bonds in the Peaks portfolios: they became relatively more attractive by having higher interest rates. As a result, bond prices went up: the prices of the two bond funds rose +1.5% (European government bonds) and +1.8% (European corporate bonds) in September.

The only thing the rate cut was not good for was the interest rate on the Peaks Interest Account. That fell along with the European Central Bank rate, by 0.25%. This shows that an interest rate cut has an immediate effect.

Conflict in the Middle East

The relative calm in the stock markets is not in line with what you see in the news every day. There are heavy conflicts playing out in the world and these can create feelings of uncertainty among investors over time. Especially when you look at the Middle East, where violence continues to spread and Israel and Iran seem to be in open conflict. Economically, this could have a negative effect on consumer and business confidence: it could make them more reluctant to invest money.

Whatever happens, remember that stock markets have always recovered from crises so far. If you invest broadly, like with Peaks, things may well backfire when things go bad globally. But eventually your investments recover. Keep this in mind for when stock markets should go down soon. In the end, the best investors are those who persevere in good times and bad.

Table 3: Net returns of index funds included in standard Peaks portfolios

Shares

Bonds

Good to know: here you can see the net returns of the index funds in September 2024, all of 2024 and since the start of Peaks after deducting Peaks, fund and transaction costs. The value of your investments may fluctuate. Past performance is no guarantee for the future.