MARKET COMMENTARY
Investors came into the third quarter of 2024 waiting for further progress on inflation, which would enable the US
Federal Reserve (Fed) to cut interest rates. Softer readings on employment and inflation data throughout Q3
suggested price pressures were meaningfully abating, and the broader trend indicated an economy that was
approaching a soft landing.
In July, the Fed had left interest rates on hold, though this was soon followed in August by weaker labor market data.
The non-farm payrolls report showed that 114K jobs were added in July, well below the consensus expectation of
175K, while the unemployment rate rose to 4.3%. This weaker jobs report sparked fears that the Fed may have gotten
behind the curve in cutting interest rates and risked damaging the economy, which caused significant monetary
policy easing to be priced in by the end of the year.
This culminated with the Fed’s long anticipated initiation of a new easing cycle, where the target range for the fed
funds rate was lowered by a surprise 50 bps to 4.75-5.00% at its September meeting, with officials signaling through
their economic projections that they expected 50 bps of additional cuts in 2024, and that their focus had shifted to
supporting the labor market from further cooling, as confidence had grown on the downward trajectory of inflation.
Treasury yields finished the quarter notably lower across the curve, with the 2-year and 10-year finishing 111 bps
and 62 bps lower to 3.64% and 3.78%, respectively, high yield bond spreads narrowed by 18 bps, and the Barclays
Aggregate Bond Index finishing the quarter up +5.20%.
During the quarter, AI-focused tech giants came under increased scrutiny over high spending on AI-related
infrastructure and the returns they could earn on their significant investments (S&P 500 +5.89% and Nasdaq
+2.76%), whereas a wider range of market segments including value-oriented sectors (Dow +8.72%) and small-cap
stocks (+10.11%), outperformed their larger peers on the outlook of a lower interest rate environment. Non-U.S.
equities, represented by the MSCI EAFE Index and MSCI Emerging Market Index, finished the quarter +7.35% and
+8.82%, respectively.
ALTERNATIVE INVESTMENT COMMENTARY*
Hedge funds began the second half of 2024 with positive performance, as the HFRI Fund-of-Funds index rose 1.1%
during the third quarter. Continued economic resiliency along with favorable inflationary data provided further fuel
to the 2024 market rally. Additionally, the Federal Reserve cut the federal funds rate by 50bps leading to further
market optimism. As a result, high beta strategies ‘Equity hedged’ and ‘Event Driven’ were among the bestperforming
strategies for the quarter as the HFRI Equity Hedged index and HFRI Event Driven index rose by 3.7%
and 4.9%, respectively. Among the worst performing strategies for the quarter was Macro as the HFRI Macro (Total)
Index fell 0.9%. The “all-weather” strategy, ‘Multi Strategy’ protected investors capital as the HFRI Multi-Strategy
index rose 2.1%. Similar to the various indices, there was a dispersion of performance across the Family Management
platform. We are pleased that the majority of our core managers were able to protect and grow capital throughout
the third quarter.
*HFRI Performance numbers taken as of October 11th, 2024
This material contains the current opinions of Family Management Corporation and its affiliates (collectively, “FMC”), which may change without notice. This material is distributed for informational purposes only. It is not a recommendation or offer of any investment or strategy. Nothing herein shall be considered a solicitation to buy or sell, or an offer to buy or sell, to or from any persons in any jurisdiction where such solicitation, offer, purchase, or sale would be unlawful. Information contained herein has been obtained from sources believed to be reliable, but are not guaranteed. FMC provides no guarantees regarding the performance of any investment or strategy. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future performance and individual client results will vary. No part of this material may be reproduced in any form, or referred to in any publication, without the express written permission of FMC.
