Monthly report Dec 2024

The financial markets concluded 2024 on a relatively turbulent note, marked by volatile stock markets, rising bond yields, and a stronger dollar. The climate contributed to mixed performance during the month, with all fixed-income funds delivering positive returns, while equity funds showed both gains and losses. 

The most significant events during the month:

• Global Economic Shifts: China altered its monetary policy to a “moderately expansionary” stance, a move last seen during the 2008 financial crisis, which was then regarded as a key factor in reigniting global growth. In the U.S., Congress passed a temporary budget effective until mid-March, avoiding another looming government shutdown. However, no decision was made on raising or abolishing the debt ceiling, leaving this issue to be addressed in the near term.

• Interest Rate Cuts and Increasing Uncertainty: In the U.S., the Federal Reserve cut interest rates by 0.25 percentage points to a range of 4.25–4.50% but signaled fewer rate cuts than expected moving forward. Similarly, the ECB reduced its rate by 25 basis points to 3.00% while indicating that further cuts are likely. In Sweden, the Riksbank lowered its policy rate by 0.25 percentage points to 2.50%. However, the Riksbank suggested a more cautious approach ahead, anticipating an economic recovery in Sweden and projecting that the policy rate will bottom out at 2.25%, which markedly differs from the National Institute of Economic Research (NIER)’s forecast.

• Political Drama: In South Korea, the president declared a state of emergency, which was later rejected by parliament. The president is now under investigation and in political limbo. In France, the government fell after a no-confidence vote, leading to a complete reshuffle of ministers. Lastly, the Assad regime in Syria collapsed—a development that, in hindsight, seemed inevitable as both of its allies, Iran and Russia, are currently preoccupied with other priorities.
  
  NIER predicts a slow economic recovery in Sweden, with households remaining cautious. They forecast that the Riksbank’s policy rate will be reduced to 1.50% by June 2025, significantly lower than the expectations of both the Riksbank and the market.

Fixed income funds development

Primary market activity was high during the first part of December before tapering off ahead of the holiday season. Many asset managers continued to see inflows, which supported the market and created favorable conditions for transactions. Simplicity participated in new share issues from private equity-owned companies MacGregor and Wrist, the financial company Creditas, and the real estate company Tagehus.

All funds performed well and posted gains during the month