Rise Stocks Portfolio – H1: 12.06%, June: 7.53%
Rise Real Estate Portfolio – H1: 6.60%, June: 1.16%
Rise Fixed Income Portfolio – H1: 4.98%, June: 0.83%
S&P 500 – H1:15.43% , June: 3.83%
Report Summary
The US stock market rallied in the first half of the year despite the ongoing global economic uncertainties. This performance was influenced majorly by continued surge in artificial intelligence-driven stocks. Major US stock indices, including the S&P 500, NASDAQ 100, and DJIA, repeatedly shattered all-time highs during the first half of the year. However, this impressive rally had a narrow focus. Bank of America Global Research strategists revealed that only 24% of stocks in the S&P 500 managed to outperform the index during this period.
The S&P 500 rose by +15.3%, Nasdaq gained +18.6%, and DJIA gained +4.8% over the six-month period. The performance of these indices was bolstered by sterling performance of technology stocks, especially in the AI sector. A handful of Big Tech stocks fueled the S&P 500’s rally this year, with shares of Nvidia Corp. surging around 155% in H1 2024. Meta Platforms Inc., Google parent Alphabet Inc., Amazon.com Inc., and Microsoft Corp. have all seen their shares soar more than the S&P 500 index this year. The S&P 500 was up more than 4% in the second quarter, after jumping 10.2% in the first three months of this year.
In the US housing market, affordability concerns remain the primary driver of consumer housing sentiment. Although mortgage rates have started to decline, with the 30-yr mortgage rate at 6.95% in June down from 7.5% in May, there is still a slow in home sales due to the imbalance between demand and supply. High interest rates have made it difficult to finance home construction, hence impacting supply of houses. Home sales are forecast to grow towards the end of the year as mortgage rates decline and interest rates are cut.
US Treasury yield has trended higher across the first half of 2024, the 10-year Treasury yield dropped from its April peak of 4.7% to 4.4% in June, leaving the bond market relatively flat between April and June. The second half of the year in the treasury market is likely to be largely characterized by potential Fed rate cuts, bond market stabilization, cash holdings shifting to risk assets, and election-driven volatility.
On the macro front, investors were expecting the Fed to cut interest rates six times going into 2024. Although the Federal Reserve still maintains a wait-and-see attitude towards interest rate cuts, there hasn’t been a single rate cut yet. Reviewing how the first half of the year has panned out, the chances of getting six rate cuts is close to none. Investors and the market have settled for one or two rates by the end of the year. Additionally, cooling inflation, amidst other macroeconomic indicators giving mixed signals on the state of the economy, has given investors hope that there will be at least one rate cut later this summer. Unemployment rate has increased steadily for the past 3 months to 4.0% in May against a forecast of 3.9%.
Asset Classes Overview
Stocks:
For the first half of the year, our Rise stocks portfolio gained +12.06%. Our Rise stocks portfolio performance can be attributed to stellar performance in some of our major holdings such as Meta, Microsoft, Alphabet, Apple and Nvidia.
Our stocks portfolio comprises carefully selected stocks across top performing industries and industries resistant to market changes, this has helped us outperform the market and hedge against losses in the event of market volatility or descent. During the first half of the year, we added Novo Nordisk, Eli Lilly, Nvidia, Nu Holdings, Hims & Hers, and Block Inc to further diversify and strengthen our portfolio across other industries.
Looking ahead, second-quarter earnings season kicks off this week with major banks including JPMorgan and Citigroup reporting. Investors will be watching whether profits from other companies are catching up with the “Magnificent 7”, many of which rebounded from struggles in 2022. More companies are projected to post improved earnings as many investors expect the economy to navigate a soft landing, which could boost stocks trading at more moderate valuations. Now is the time to get in on the Rise stocks portfolio and ride the coming rally in the market.
Real Estate:
Our Rise real estate portfolio has delivered a solid performance so far this year, achieving a 6.6% return for the first half and +1.16% for the month of June 2024. The real estate market is constantly evolving, with housing prices on a continuous rise. Despite the movement in the 30-year mortgage rate, which has moved between 6.62% to 6.95% in H1 (hitting a high of 7.22% in May), and the Federal Reserve’s slow action on cutting interest rates, our portfolio has managed to thrive.
Additionally, housing starts, a key indicator of new home construction, have been lower than expected which indicates that there is a shortage in supply of new houses in the market. This will drive house prices further and make people opt for rental properties instead of purchasing new homes. These factors, combined with our strategic positioning and adept property management, are the reasons why our underlying assets have performed well in a volatile market, providing favorable returns to our investors. We expect this performance to continue in the near future.
For the second half of 2024, we forecast the current housing situation to remain if interest & mortgage rates stay high, and home prices keep rising. In the past quarter, we have seen slowing household income growth, rising unemployment rate, and a weaker economy further contribute to the current imbalance between supply and demand. However, we believe a combination of factors such as continued household income growth, a further slowing of home price appreciation, or a decline in mortgage rates will bring affordability within range of many waiting first-time and move-up home-buyers.
Fixed Income:
Our fixed-income portfolio also performed well in the first half of the year, generating a return of 4.98%, 0.83% for June 2024. Our steady and consistent returns underscores the effectiveness and reliability of our fixed-income strategy, providing passive income to our investors. Yields have remained relatively steady following the hawkish tone from the April FOMC meeting. Despite some initial volatility, yields on the benchmark U.S. 10-year treasury ended the quarter at 4.51%, +43bp above where it started the year. This stability in bond yields protected our Fixed-income plan from the larger market uncertainties and contributed to the overall positive performance of our fixed-income investments.
With headline inflation heading towards the Fed’s 2% target rate, and the labor market softening, we see a pathway to a rate cut of 25 bps this quarter and another 25 bps in November 2024. In our investment thesis, we maintain a preference for quality bonds, which should benefit as the Fed starts cutting rates.
As always, Rise is committed to helping you achieve your financial goals through thorough analysis and careful selection of investment opportunities. So, stay invested or click here to begin investing.