SRI 10% Portfolio Performance

2024 was a year of divergence across major asset classes. On the one hand, global equities and gold posted significant gains – 18% and 27%, respectively – driven by a combination of solid economic growth, healthy corporate earnings, exuberance for tech, and Fed rate cuts. On the other hand, global bonds posted negative returns of 3% for the year – weighed down by still-sticky inflation, concerns about government debt issuance, and increasing uncertainty about the path of central bank policy.

This is in line with how asset classes tend to perform in an environment of “Inflationary Growth” – where growth is solid and inflation is sticky. Given its positioning for such an environment, ERAA®'s portfolios have continued to outperform their same-risk benchmarks on average in 2024.

Most of the year’s strong performance for global equities was driven by the US market. ERAA®'s allocations to broad US equities helped capture these gains. Pulling in the other direction, its underweight allocation to communications services and its overweight allocations to healthcare and energy were detractors to relative performance.

Despite the start of major central bank easing cycles, global bonds continued to face headwinds in 2024. Our portfolios navigated this challenging environment via ERAA®'s overweight positioning on ultra-short-duration US Treasuries. Its allocations to higher-yielding parts of the fixed income market – including non-investment grade corporate and emerging market debt – also supported performance.

Safe-haven demand, elevated geopolitical tensions, and sticky inflation were near-term factors underpinning the strong performance of gold in 2024. Meanwhile, concerns over increased US government bond issuance and global central banks’ demand for the asset remain longer-term sources of support. These serve as the basis for our ERAA®'s overweight allocations to gold.

For a deep dive into the details, here’s our full commentary.