Meadowville Distribution Center

The global economic environment changed dramatically in the first quarter as bond yields, which had marched down in the 4th quarter on the belief that central bank pivots were fast approaching, reversed course. Prospects for mid-year reductions in short-term interest rates remain high for Europe and the UK, but persistent strength in the U.S. labor market has pushed prospects for a shift there closer to the end of 2024. Still, non-U.S. equities found purchase in solid earnings even as they faced headwinds from a strong dollar due to the evolving central bank dynamics and heightened geopolitical risks. As noted below, we see a range of foreign stocks that can flourish in the current environment and remain excited for the potential of stocks both in developed and emerging markets to compete well against U.S. peers.

The Bailard Technology Strategy posted a Q1 total return of 17.08% net of fees, meaningfully ahead of the competitor-comprised benchmarks, with the Morningstar U.S. Open End Technology Category return of 8.56% and the Lipper Science and Technology Fund Index return of 12.18%. The Strategy also led both the S&P North American Technology Index return of 15.31% and the mega-cap Nasdaq-100 Index return of 8.72%. Over longer time periods of 3, 5, and 10 years, the Strategy’s net returns continued to lead the competitor’s peer group benchmarks.

Equity markets rose again in Q1, but relative returns were skewed toward growth. The seven mega cap technology stocks that did so well in 2023 retained their “magnificence” in Q1, resulting in indices with Magnificent 7 exposure beating indices that lacked it. Curiously, rising interest rates over the quarter did not dampen investors’ enthusiasm for long duration (growth) assets, even with the Fed signaling that potential rate cuts may come later and to a lesser degree than had previously been anticipated.