As the last six months or the first half of the year have passed, what have we observed in the realm of wealth management?

The stock market exceeded all predictions by delivering an impressive performance during the first half of 2024. However, the remarkable success raises an important question for investors: Can stocks continue to rise further?

The S&P 500 experienced a significant increase of almost 15% during the first half of the year. Within that time frame, the Dow Jones Industrial Average experienced a 4% uptick, while the Nasdaq, which is known for its focus on technology companies, saw a significant 18% surge.

The gains were primarily concentrated in a select group of tech giants, commonly referred to as the magnificent seven: Alphabet, Amazon, Apple, Meta, Microsoft, Tesla, and Nvidia. Even among that group, only a privileged few were able to enjoy the gains. The stock price of Nvidia, the company behind numerous computer chips fueling advancements in AI, has surged by almost 150% since the beginning of 2024. Microsoft’s shares, the company with a significant stake in OpenAI, have experienced a remarkable 20% increase in value this year. Arms Holdings and Constellation Energy showed strong performance in the second quarter of the year.

Property Loan Notes issued by prominent Asset Management firms in the UK have faced difficulties recently. The Bank of England base interest rate has experienced a significant rise from 0.25% to 5.25% within just eighteen months. Additionally, global capital markets have shown a noticeable lack of activity. Obtaining planning permissions now takes twice as long, with an average timeframe of twenty-four months. Furthermore, global supply chain issues resulting from world events have led to higher construction costs and subsequent project delays. Some Asset Management firms have been affected by the challenges in the UK, making it difficult for them to achieve the projected development profits.

Investment-grade corporate and government bonds continue to be appealing due to their lower risk and relatively high yields. Investors with a strong appetite for risk and a long-term perspective may find high-yield bonds and preferred securities worth considering. However, it is essential to note that we do not recommend allocating a significant portion of one’s portfolio to these assets. Corporate bond investments had a strong performance in the first half of the year, benefiting from increased income payments and decreasing spreads. More aggressive investment options, such as high-yield corporate bonds, bank loans, and preferred securities, showed better performance compared to investment-grade corporates.

What areas should investors focus on in the second half of the year 2024?

After a robust start to 2024, analysts anticipate that the stock market may face challenges in maintaining its rapid growth for the rest of the year. Investors are becoming cautious due to soaring prices and uncertainties surrounding the economic outlook and the upcoming November election. Investors have the opportunity to maximise their gains by taking advantage of stock prices that are currently at a reasonable low. Nvidia made a wise decision by announcing a stock split, which resulted in a boost to their stock. This move has made the stock more affordable for both retail and corporate investors. It is essential to select stocks that are in line with the current market trends and have the potential to significantly increase an investor’s portfolio over the next 24 to 48 months.

The property loan notes have performed satisfactorily in the first half of the year. However, given the current economic conditions, particularly in the UK, many experts suggest that a realistic profit delivery cycle now spans three years. To adapt to this significant shift, investors should consider longer-term investments in property notes or be prepared for potential signs of default. For investors, it is essential to consider the potential impact of short-term investments on their portfolios. It would be wise to focus on more regulated products or explore alternative investment options with a long-term perspective.

The corporate and government bonds markets are poised for growth in the coming six months. Investment-grade corporate bonds continue to be appealing, with their average yields of 5% or higher. We recommend that investors gradually increase the duration of their bond holdings by considering intermediate-term bonds. Additionally, investment-grade corporate bonds can be a viable option as they offer comparable, if not higher, yields compared to short-term alternatives. Long-term investors may find high-yield bonds and preferred securities worth considering despite potential volatility. However, it is not recommended to hold oversized or overweight positions in these assets due to their relatively low yield advantage compared to high-quality investments. Several preferred securities do provide tax benefits, though.

The focus for the latter half of 2024 should be on income-generating products that are subject to regulation. It includes government and corporate bonds, as well as the emerging ESG bonds that are currently offering attractive yields. At Innovest Global Wealth, we are pleased to provide comprehensive reviews of a wide range of bonds in USD, EUR, and GBP. Our goal is to offer both potential and existing customers unbiased opinions on each bond. When it comes to growth products like Stocks, investors would prefer to select stocks with high PE ratios, strong buy ratings, and the potential to grow their portfolio exponentially. Products such as mutual funds, structured notes, credit-linked notes, and savings plans can be effective when they are connected to solid stocks and equities.

Lastly, existing and potential investors must consider their risk appetite in relation to the available products. It is highly recommended that they consult a professional investment or financial advisor before making any investment decisions.