PSN Top Guns Managers of the Decade 2024 - A Decade Driven by Political Events, a Pandemic and Historical Monetary Policies

The past decade will be remembered for its overall strong U.S. equity returns (Russell 3000 index +12.55%) as the Federal Reserve (Fed) started to unwind its post- Global Financial Crisis accommodative polices. Equity performance remained strong during the early stages of the decade. Meanwhile, 2024 marked another strong year for equities as mega tech stocks and the AI boom drove markets to new records. Sandwiched in between were a multitude of highs and firsts. It included unprecedented government intervention, record low interest rates, and eye-opening political events; all culminating in a risk-on environment as U.S. equities (S&P 500 index +13.10%), U.S. high yield bonds (ICE BofA US High Yield index +5.08%) and international equities (MSCI World Ex. US index +5.80%) posted solid returns during the decade.

The decade started off strong, as U.S. equities benefited from stable economic growth and a risk-on investment environment as the S&P 500 index posted returns of 20% or more during three of the first seven years. 2016 will be remembered as the year political events defied expectations. The rise of populism lead Britons to vote “yes” to leaving the European Union, while Donald Trump shocked the world by becoming the 45^th President of the United States. Yields on Sovereign debt hit all-time lows and, in some cases, hit negative territory. Through all this political turmoil, equity markets remained resilient in 2016, as U.S. equities (Russell 3000 index) finished the year up +12.74%, emerging markets (MSCI EM index) posted a +11.60% return, while the MSCI EAFE index posted a modest +1.51% return.

While the Fed started to tighten monetary policies in December 2015, the U.S. economy continued to expand due to fiscal stimulus and a historically strong labor market in 2018, as U.S. equities hit all-time highs in September. Large cap growth (Russell 1000 Growth +17.09%) and small cap growth stocks (Russell 2000 Growth +15.76%) led the rally during the first nine months of 2018. However, the risk-on sentiment quickly changed as investors fretted over the Fed’s rate hiking policy, global growth, geopolitical issues, and trade tensions. The early equity gains quickly turned to losses, as all major global equity indexes finished 2018 in the red, led by the S&P 500 index (-4.38%), MSCI EAFE index (-13.36%) and MSCI EM index (-14.24%). Due to the quick change in sentiment, investors flocked to safety in fixed income, as short-term Treasuries, measured by the Bloomberg U.S. Government 1 – 3 Yr. index, finished the year up +1.58%.

After experiencing their first negative year since 2008, U.S. equities rebounded strongly the following year. 2019 marked the end of the Fed’s three-and-a-half-year rate hiking cycle and the beginning of its rate cutting cycle. The Fed pivot was welcomed by investors and resulted in the best year of the decade as the S&P 500 index posted an eye-opening +31.49% return while Developed equity markets (MSCI World index) posted a strong +28.40% return. Fixed income also benefited from the beginning of the rate cutting cycle as the Bloomberg U.S. Aggregate index posted a strong +8.72% and the ICE BofA US High Yield index posted a +14.41% return.

We cannot discuss the past decade without talking about 2020. A global pandemic that resulted in a global economic shutdown as governments around the globe enacted shelter-in-place measures to try and stop the rapid spread of the COVID-19 virus. These measures resulted in millions of unemployed in the U.S. alone. This short period of time was unprecedented for financial markets as oil (WTI) plummeted to -$37 a barrel, 10-year Treasury yields hit 0.52%, and the S&P 500 index fell a -34% in a matter of weeks. However, strong, and swift actions from the Fed and U.S. Government helped stabilize markets as the S&P 500 index defied expectations to finish the year +18.40%. Technology stocks soared (Russell 1000 Growth index +38.49%) as consumers and businesses turned to technology during the lockdowns.

2022 will be remembered for the beginning of the war in Ukraine and an end to the historically accommodative monetary policies that helped rescue the U.S. economy and financial markets from the global pandemic. Not only did the Fed take away the punch bowl at the party, but it also started its very aggressive tightening policies to try and tame 40-year high inflation that was a result of very accommodative monetary and fiscal policies during the pandemic. The tightening of purse strings resulted in reduced liquidity and an end to excessive exuberance. These tighter policies resulted in equity markets reaching bear market territory and bond markets experiencing their worst year ever. The S&P 500 index posted a -18.11% return while the MCSI EAFE index fared a little better (-14.01%). Meanwhile, bonds provided no haven for investors as the Bloomberg U.S. Aggregate index fell a -13.01% and the perceived safety of Treasuries didn’t help either as the ICE BofA US Treasury index fell a -12.85% during the tumultuous year.

The decade closed on a high note as the Fed stopped its rate hiking cycle and started its rate cutting cycle as Covid-era inflation cooled. The S&P 500 index posted a +25.02% return during the year while emerging market equities (MSCI Emerging Markets index) posted a solid +8.05% return despite falling sharply at the end of year on concerns trade tariffs will increase. 2024 will be remembered for the continued strong performance of mega tech stocks, namely the Magnificent Seven (Apple, Alphabet, Microsoft, Amazon, Meta, Tesla, Nvidia), and stocks that were connected to the AI revolution. The communication services (S&P 500 Communication Services index +40.23%) and information technology (S&P 500 Information Technology index +36.61%) sectors benefited from the strong performance from tech-related stocks.

Below are the strategies that navigated the past ten years to make the PSN Top Guns of The Decade.

U.S. Large Growth Universe Top Guns of the Decade

EAFE Universe Top Guns of the Decade

Core Fixed Universe Top Guns of the Decade

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PSN Top Guns quarterly commentary is presented by Zephyr's Market Strategist Ryan Nauman whose analysis and research has been shared on financial industry media including WealthManagement.com, Reuters, CNBC, Bloomberg, MarketWatch.com, Yahoo! Finance, and the Wall Street Journal, while being a regular guest on TD Ameritrade Network, Yahoo! Finance, Bloomberg TV, Bloomberg Radio and Chuck Jaffe’s Money Life podcast.

View entire list of PSN Top Guns of the Decade for 2024