The London Company Income Equity Vs. Russell 1000 Full Year 2024 Commentary

2025-02-21 08:05:00 ET

Summary

• The London Company Income Equity portfolio returned 12.3% year-to-date vs. a 24.5% increase in the Russell 1000 index.
• The Income Equity portfolio trailed the Russell 1000 in 2024, falling short of our goal of 85-90% upside participation in a rising market.
• Equity markets delivered strong gains in 2024, but these were largely driven by multiple expansion, leaving valuations stretched and performance reliant on a few mega-cap leaders.

Full Year Market Update

U.S. equities posted another strong year of performance in 2024, in almost a carbon copy of 2023's robust gains. An easing of macro risks (lower inflation and a weakening labor market), a shift at the Federal Reserve to less restrictive monetary policy, and a late-year election bump drove market gains. And like last year, there was a wide dichotomy in leadership as the market favored larger cap growth over smaller cap value. While equity markets delivered strong headline gains in 2024, these returns were largely driven by multiple expansion, leaving valuations elevated and the market increasingly reliant on a handful of mega-cap leaders. Looking at market factors, Growth, Volatility, Size, and Momentum factors had the most positive impact on relative returns, while Value, Yield, and most of the Quality factors presented headwinds....

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