Bond funds also performed relatively well last year: in December they grew by 2% and appreciated by 8.7% for the whole year. The mixed funds then responded to the growth in stocks and bonds and at the end of the year they grew by 3.2% and 11% overall.
As the economist of the Partners financial group Martin Mašát pointed out, in December the positive atmosphere on the financial markets gradually increased towards the Christmas holidays. According to him, the gifts were distributed mainly by central banks, without exceptions.
The American FED was the first to influence the financial markets, where after a long time the doves returned to the fore. The European Central Bank meeting sounded in a similar spirit. Finally, the Czech National Bank carried out the first reduction in the base rate.
Next year’s stocks are unlikely to outpace this year’s growth, analysts say
A significant reduction in interest rates is expected
American central bankers expect a significant reduction in key interest rates for 2024. According to Mašát, a similar opinion can also be found after the meeting of the European Central Bank.
“The golden nail was the Czech National Bank, which even before confirming the decline in inflation in the January data, delivered to the market the first reduction in the base rate of a quarter of a percentage point to 6.75%, ” Mašát said. As he added, reduced fear of inflation and high interest rates had a positive effect on the prices of all financial assets at the end of the year, which is why both stock and bond mutual funds showed numbers more than solid.
In December the average performance of diversified Crown equity funds offered in the Czech Republic was approximately 5%. “Over the last twelve months, investors have earned an average of 18%,” added Mašát.
A group of targeted equity funds, which focus on specific regions or sectors, recorded an average positive performance of 4.5% in December, in contrast to funds focused on major markets. What depressed them, according to Mašát, was the underperformance of funds focused on stocks from underdeveloped countries and China, where stock markets actually collapsed.
Partners: Bondholders will gain
In December, Czech government bond yields not only fell in line with government bond yields abroad, but the state budget deficit also developed beyond expectations, Mašát emphasized.
Furthermore, at the end of November the rating agency Moody’s improved the outlook for the Czech Republic from negative to positive. “Lower inflation and thus higher demand for long-term bond yields have pushed their prices higher. This is good news for bond funds, which have achieved an above-average performance this year,” Mašát added. According to him, bond fund shareholders will be able to enjoy the future real appreciation of their conservative reserves.
In line with the trend in share and bond prices, mixed funds also credited clients with a positive appreciation last year, i.e. on average the 11% mentioned above.
Last year, transactions on the Prague Stock Exchange fell by 26%.
2024-01-11 05:05:00
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