MARKET COMMENTARY
Fourth quarter 2024 results were shaped by November’s U.S. presidential election, as financial markets around the
globe digested the implications of a second Trump presidency. The US economy remained strong with annualized
GDP growth of 3.1% in Q3. Labor market data was choppy as non-farm payrolls rose by just 43K in October but
was followed by a stronger 212K gain in November, and though inflation made downward progress in 2024, it has
proven resilient and remained above the Fed’s 2% target.
During its December meeting, the Federal Reserve cut its target range for the fed funds rate to 4.25%– 4.50%. This
was the third cut of the year, totaling 1% in 2024, but was accompanied by an updated Summary of Economic
Projections that suggested the pace of rates in 2025 would likely slow as pockets of inflation persisted, and with the
economy on strong footing, FOMC members noted they saw little reason to cut more aggressively.
As investors digested this “higher for longer” rate scenario, Treasury yields recalibrated, with the 2-year and 10-year
finishing 60 bps and 79 bps higher to 4.24% and 4.57%, respectively, high yield bond spreads narrowed by 11 bps,
and the Barclays Aggregate Bond Index finished the quarter down -3.06%.
Stocks ultimately finished higher in fourth quarter (S&P 500 +2.39%, Nasdaq +6.36%) closing out another strong
year, with the S&P 500 producing back-to-back years of >20% returns for the first time since 1998 and 1999. Market
dynamics in the fourth quarter repeated the pattern seen for much of the past two years, with the Magnificent Seven
accounting for most of the gains, compared to the S&P small cap index (-0.60%) which struggled and value-oriented
areas (Dow +0.93%) that gained but to a lesser extent for the quarter. Non-U.S. equities, represented by the MSCI
EAFE Index and MSCI Emerging Market Index, finished the quarter -8.06% and -7.83%, respectively, in the face
of concerns about the impact of Trump’s proposed tariffs, particularly on China.
ALTERNATIVE INVESTMENT COMMENTARY*
Hedge funds finished 2024 positively, ultimately capping off another successful year of protecting and growing
capital as the HFRI Fund-of-Funds index rose 1.7% in the fourth quarter. Economic optimism about a “new” U.S.
administration cutting regulation along with the Federal Reserve lowering interest rates increased confidence for the
future economic landscape. As a result, high beta strategies ‘Event Driven’ and ‘Equity Hedged’ were among the
best-performing strategies for the quarter as the HFRI Event Driven index and HFRI Equity Hedged index rose by
1.6% and 1.4%, respectively. With such a strong quarter, one of the lowest-performing strategies, Macro, still grew
capital, as the HFRI Macro index rose by 0.8%. In 2024, the “all-weather” strategies cemented another impressive
year with the HFRI FoF and HFRI Multi-Strategy indexes rising 10.0% and 7.0%, respectively. Similar to the various
indices, there was a dispersion of performance across the Family Management platform.
*HFRI Performance taken from first posting in January 2025.
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.
