Periodic Table of index returns 

Global markets experienced a heady ride in 2024, shaped by a mix of cautious economic recovery, geopolitical tensions, technological progress and changing monetary policies. Investors of nearly all persuasions came out winners, especially those with international allocations. Equity market investors celebrated double-digit gains, while in most cases conservative investors still managed to outpace inflation.

The scattered colours of the table reveal few reliable themes, with the exception of the old adage that, eventually, greater risk tends to be rewarded by greater return. The 10-year average performance numbers generally show a ranking of more volatile to less volatile asset classes (with the notable exception of commodities). However, the table indicates that the path along the way is anything but predictable.

Below, we take a closer look at what markets delivered to investors in 2024.

The backdrop of 2024 was a global economy gradually recovering from the disruptions of the Covid-19 pandemic. For the most part, central banks adopted a more “dovish” stance after a series of aggressive interest rate hikes in 2022 and 2023.

Equity markets delivered impressive performance in 2024, particularly through large-cap and growth-oriented companies. In the US, the S&P 500 Index returned a stellar 25%, buoyed by a resilient economy, corporate earnings growth and a favourable interest rate environment. Perhaps most notable was the dominance of a select group of technology stocks known as the ‘Magnificent 7’ (Apple, Microsoft, Amazon, Alphabet, Nvidia, Tesla and Meta Platforms). This group benefited from increased investment in AI, cloud computing and digital transformation initiatives. In addition there was general optimism about the outcome of the November US presidential election leading to more pro-business policies.

Outside the US, Japanese equities also performed robustly last year, aided by corporate governance improvements and the shift from a deflationary to an inflationary period. Most other regions produced double-digit returns, including emerging market equities which were bolstered by strong showings of India and Southeast Asia. These regions benefited from robust economic growth, increasing foreign direct investment and a growing middle class. European equity markets were somewhat more subdued as they grappled with the conflict in Ukraine, concerns over energy supply and residual inflationary pressures.

The returns of overseas assets to domestic investors were heavily influenced by currency movements in 2024. This is most evident when comparing the outcomes of global equities on a hedged (up 23%) versus an unhedged (up 31%) basis. Clearly, exposure to foreign currencies was advantageous, with the Australian dollar falling against the US dollar over the year.

Emerging market equity returned 18% over the year, less than developed markets, as investors fretted over the potential impact of tariffs on exports.

Meanwhile, investors in Australian equities did not need to concern themselves with currency fluctuations and pocketed a handy 11% return for the year with the banking sector leading the way.

Fixed interest markets experienced a notable resurgence heading into 2024, and to some extent this continued amid stabilising interest rates and an easing of monetary policies. This helped Australian bonds deliver a respectable 3% for the year, outpacing global bonds. With the RBA reluctant to reduce rates, cash returned 4.5%. With steady interest rates, global listed infrastructure returned 13%.

The property sector faced challenges in 2024, particularly in the office space segment. Globally, the shift towards remote and hybrid work models continued to reshape demand. In contrast, the industrial and logistics sectors thrived, driven by the ongoing e-commerce boom. Investors increasingly turned to alternative real estate assets, such as healthcare and data centres, which benefited from long-term demographic trends and technological advancements. Overall, however, a rise in bond yields late in the period weighed on global listed property which returned a modest 4% for the year. In addition, Australian direct property suffered from lagged valuations and returned -6%.

Other defensive assets like hedge funds delivered a solid return in 2024, up 9%, benefitting from directional equity exposure and market volatility. 

2025 is showing to be a year of heightened geopolitical and equity volatility, with significant changes in US policy. The unpredictability of capital markets over the short term is a feature that is testing investors repeatedly and is resonating as we experience the heightened volatility of early 2025.

In such an ever-evolving market environment, what is an investor to do? One can spend hours gazing at the Periodic Table seeking to identify patterns – whether real or, oftentimes, illusory. Alternatively, one can focus on structuring portfolios to try and withstand a variety of market conditions with an eye on longer-term outcomes.

For many investors, a way forward is to know their true time horizon, recognise the downside risk they can tolerate along the way, and try to harness the benefits of both asset class diversification and patience as much as possible. There will undoubtedly be twists and turns along the road, but this may enhance an investor’s chances of reaching the finishing line to enjoy longer term outcomes. 

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