Monthly Report December 2024

Dear investors

Global economy and financial markets

With expected real growth of 3.2% in 2024, the global economy grew almost as strongly as in the previous year, while inflation fell as expected. The easing inflation pressure has given central banks the leeway to gradually lower their key interest rates. Cumulatively, the Swiss National Bank (SNB) cut interest rates by 1.25%, the European Central Bank (ECB) by 1.35%, and the US Federal Reserve FED by 1%.

The outstanding performance of a very small number of stocks with a large index weight led to significant differences in the development of international stock indices. The MSCI World industrialized market index achieved a total return of 19.6% (in USD), the MSCI Emerging Markets index 8.3% (in USD), the broad Swiss index SPI 6.2% and the DAX 18.8% (in EUR).

Although persistently high inflation has delayed the recovery in bond prices in part, medium-grade corporate bonds exceeded their highs of 2021. Commodities benefited from the sharp rise in the price of gold (+24.9%), as a result of which the broad commodity index also rose by 12.5% (both in USD).

Successful performance of format systems

Eight of the nine format asset management strategies have exceeded their benchmarks. The performance of Swiss dividend stocks was particularly pleasing, with a net return of 17.4% and an advantage of 11.3% over the SPI benchmark. Equally impressive was Balanced International, which achieved a return of 8.0% and was 5.8% above the benchmark thanks to substantial exposure to the American Nasdaq technology index.

An overview of fund returns, mandates and key individual positions for the full year 2024 can be found in the supplement. Further information on the three equity investments can be found in the annual reports sent separately.

Outstanding individual positions in the portfolio

The following portfolio companies achieved outstanding performance in 2024: Accelleron (+82.0%), Swissquote (+72.8%), Aluflexpack (+62.0%), Sulzer (+57.7%), Lonza (+52.7%), VZ Holding (+52.7%), Swiss Re (+47.5%), Holcim (+37.1%), Helvetia (+35.6%), ABB (+34.6%) 3%), Belimo (+31.7%), Burckhardt Compression (+31.2%) and Julius Bär (+31.0%).

Outlook: Opportunities and challenges in 2025

Moderate global economic growth and stable or falling inflation are still expected for 2025. The SNB's monetary policy has contributed to the Swiss franc not rising any further in value last year. A higher US dollar and a slightly higher euro could support the results of Swiss companies, particularly medium-sized and smaller companies, which could benefit from lower interest rates.

The short to medium-term development of bond prices will depend largely on the interest rate policy of central banks.

New funds and developments in format

In the fourth quarter of 2024, Format launched two new funds:
Swiss equities Flex format: A flexible investment instrument that invests in one or more of the three existing equity investments format, depending on the market environment. In the medium term, it aims for higher net returns and lower setbacks.
Absolute Return format: An alternative investment with a target return of 4-5% p.a., very low volatility and low setbacks. The broadly diversified portfolio takes into account established strategies and managers with desired return and risk characteristics.

We wish you all the best and every investment success for 2025!
Best regards

Matthias Hug and Markus Lackner

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