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Fund sector reviews

Global funds sector review - early rate cuts becoming unlikely?

Have global interest rates peaked and are rate cuts on the horizon for the US and China? We take a look at how different regions have been coping, and how stock markets have performed.

No recommendation - No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

Higher interest rates were a theme we had to get used to in 2023 and will probably be the talking point in 2024 too.

As inflation increased around the world, so did interest rates as central banks fought rising prices. Higher rates have tended to cool an economy, lower rates aim to kickstart it. But this has come at a cost, especially in developed countries.

This article isn’t personal advice. If you're not sure if an investment is right for you, ask for financial advice. All investments and any income they produce can rise and fall in value, so you could get back less than you invest.

What were the effects of inflation and interest rates?

World Gross Domestic Product (GDP) growth is expected to be just 2.9% in 2024, a slower increase than 2023 and 2022. The US is expecting to grow just 1.5% down from 2022 and 2023. The Euro area is expecting to grow 1.2% up from 2023 but still significantly lower than 2022.

There had been hopes, going into 2024, that we’d see interest rate cuts to help boost growth, since lower interest rates tend to be a good environment for stock markets. This was after a string of central banks holding interest rates steady, and falling inflation across many countries.

But so far, these hopes seem to be fading. In the US, recent jobs data shows the resilience of the economy. The US added 216,000 jobs in December, ahead of expectations and continuing the upward trend from October.

In Europe inflation rose to 2.9% reversing six months of falling inflation in a row. Business activity in Europe was also revised upwards suggesting the economy’s staying strong.

In emerging markets, growth seems to be less of a worry for central banks. Emerging and developed Asia is expected to grow 4.8%, Middle East and Central Asia 3.4% and Africa 4%, all ahead of the global expected growth. India is expected to be a key driver of growth in developing markets and is expected to grow 6.3%.

Historically, China was the leader of economic growth in developing markets. But slow retail spending and a debt-ridden property sector has led to low consumer confidence. Growth in China is expected to be just 5%, well below its historic average.

With developed markets still showing resilience, at least for the time being, and many developing markets expected to have strong growth in 2024, the chances of early rate cuts this year seem to be dropping.

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How have global markets performed?

Global stock markets have seen positive results over the 12 months to the end of December. Over the past year, the broader global stock market has risen 15.88%*. As always though, past performance isn’t a guide to future returns.

The S&P 500 index rose 19.16% over the year. The US market performed strongly but, most of the performance was led by the ‘magnificent seven’. These select companies had most of the returns over the year, now trading at a big premium compared to the rest of the market.

Whereas small and medium-sized companies in the US have been left behind, the valuation gap between them could be an attractive entry point. It’s important to remember though that smaller companies often recover quicker from economic uncertainty, but typically perform worse during.

The Chinese market, fell by 16.05% over the past 12 months. China was expected to be the place to be at the start of 2023 after re-opening their economy from lockdown. But the return to growth has stalled.

Consumers were expected to spend built up savings from a series of lockdowns, but retail spending has been below expectations. The country is also dealing with a stalling property sector where demand has significantly fallen. Chinese stocks are now trading at a significant discount to its recent history and compared to other global peers.

Technology had the highest returns of any sector in 2023, gaining 42.91%.

This was fueled by recent advancements in Artificial Intelligence (AI). The consensus is that AI will provide businesses with the opportunity to streamline and offer better services and products. So, the businesses that have the most to gain or have been early adopters have typically been in the technology space.

Utilities had the lowest returns of any sector over the past 12 months, returning -4.35%.

One-year stock market performance

Past performance isn’t a guide to future returns.
Source: *Lipper IM, to 31/12/2023.

Annual percentage growth

Dec 18 – Dec 19

Dec 19 – Dec 20

Dec 20 – Dec 21

Dec 21 – Dec 22

Dec 22 – Dec 23







MSCI ACWI/Information Technology






MSCI ACWI/Utilities






MSCI China






S&P 500






Source: *Lipper IM, to 31/12/2023.

How have our Wealth Shortlist funds performed?

Global funds on the Wealth Shortlist delivered mixed performance over the past year.

During 2022, funds investing in companies undergoing a turnaround or those focused on paying a dividend, otherwise known as ‘value’ focused funds, generally did well.

However, in 2023 the market swapped and funds investing in companies capable of above-average earnings growth, typically performed better. Companies that were thought to be benefit from advancements in AI specifically performed very strongly over the year.

One year is a short time to assess the skills of a fund manager. Managers with different strengths, styles and areas of focus will perform differently over time.

Investing in funds isn't right for everyone. Investors should only invest if the fund's objectives are aligned with their own, and there's a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a long-term diversified portfolio.

Remember, all investments can fall as well as rise in value, so you could get back less than you invest. For more details on each fund and its risks, please see the links to their factsheets and key investor information below.

Rathbone Global Opportunities

Rathbone Global Opportunities' growth style of investing was in favour for a lot of 2023, making it the best-performing fund in the global sector of the Wealth Shortlist over the year. The fund returned 18.30%* versus 12.44% for the IA Global Sector.

Our analysis suggests that the managers stock selection has been the main driver of returns over the past 12 months. The managers selections in the UK and North America as well as investments in basic materials and financials have all benefitted the fund’s performance. Although the manager currently has no exposure to emerging markets or smaller companies, he does have the flexibility should he wish. Investing in smaller companies and emerging markets adds risk.

Troy Trojan Global Income

The Troy Trojan Global Income fund was the weakest performing fund in the global sector of the Wealth Shortlist, returning 1.43% over the past 12 months.

The manager’s focus on high-quality companies means we typically expect the fund to hold up relatively well when markets are falling. In contrast, we expect the fund to lag the peer group when markets rise quickly. This has been the case recently as markets have rallied, especially in the US and the technology sector. Investors should be aware the manager does run a concentrated portfolio and has the ability to invest in smaller companies, both can add risk.

We still rate the team’s disciplined investment approach, it’s been used across a range of funds over the years with good outcomes.

Annual percentage growth

Dec 18 – Dec 19

Dec 19 – Dec 20

Dec 20 – Dec 21

Dec 21 – Dec 22

Dec 22 – Dec 23

IA Global






Rathbone Global Opportunities






Trojan Global Income






Past performance isn’t a guide to future returns.
Source: *Lipper IM, to 31/12/2023.
Important information - Please remember the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. This article is provided to help you make your own investment decisions, it is not advice. If you are unsure of the suitability of an investment for your circumstances please seek advice. No news or research item is a personal recommendation to deal.
Written by
Aidan Moyle
Aidan Moyle
Investment Analyst

Aidan joined the Fund Research team in 2022 and is responsible for analysing funds and investment trusts in the US and Global Sectors. He has a keen interest in macroeconomics and in particular US monetary policies and the impact it can have on clients' investments.

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Article history
Published: 19th January 2024