What we saw: Markets experienced positive returns in 2024 as both major categories of assets, equity and fixed income, finished the year up despite a modest downturn at the very end. US domestic equities – large-cap growth in particular –carried equity returns into positive territory for the year, resuming an upward march in the fourth quarter after a negative third quarter.  

Value investing continues to lag growth-oriented investing. The S&P 500 continued a two-year rebound from the lows of 2022, posting a total return of 25% for 2024, and has now returned an impressive total return of 58% since the beginning of 2023.  

Fixed income gains were modest for the year as rising long-term interest rates weighed on returns in the second half of the year. International equity markets were down for the fourth quarter, but slightly positive for the year. Rising yields late in the year weighed on aggregate fixed income prices.  

 The continued stability of the US economy powered markets as the recession calls of 2023 and early 2024 finally receded and the Federal Reserve began a series of interest rate cuts in the second half of the year.  

Looking forward: Macro conditions remain supportive of corporate earnings, employment and consumer spending in the US, but also increase the likelihood elevated inflation and interest rates remain as headwinds.   

Current forward-looking price to earnings measures indicate a significant amount optimism is already baked into the US domestic equity prices. Nominal GDP growth and corporate earnings are relatively in sync – both growing in mid-single digits over the last two years. This suggests the relative outperformance of equities is anticipatory in nature. Likely drivers of multi-asset volatility in 2025 are elevated forward-looking equity valuations against the backdrop of alternatives in the fixed income market and uncertainties of inflation, geopolitical tensions and policy action under the new administration. 

Of note in the second half of 2024, is the steepening of the yield curve coinciding with a Federal Reserve rate cutting campaign that began in the third quarter. The 10-year Treasury yield rose 95 basis points during that period. Increasing market interest rates while the Federal Reserve is lowering the Federal Funds Rate is unusual. While most yields are lower than their peaks following the series of Federal Reserve rate raises in early 2023, the most recent rise among longer durations present opportunities for diversification against a backdrop of elevated equity prices. Most market observers believe the rising rates reflect expectations for continued economic growth, elevated (but contained) inflation, and a likely pause in the rate lowering cycle by the Fed as it struck a more “hawkish” tone while announcing the most recent rate cut. 

 NCCF investment performance: NCCF’s investments are balanced allocations designed for long-term charitable purposes and are intended to take advantage of long-term market gains across various asset classes, while prudently reducing risk and volatility through diversification.  

NCCF’s investment results were positive for the year and mixed for the quarter. Most NCCF managers posted slight losses for the quarter and on a rolling one-year basis ranged from 10.5-12.5%. The NCCF Investment Fund exceeded the Diversified benchmark for the rolling one-year measure, returning 10.5% and 10.0% respectively. On the quarter, the NCCF Investment Fund was relatively flat posting small a loss of 0.08%. 

More market commentary is available from NCCF’s investment advisor, Graystone Morgan Stanley. For investment information specific to your fund, please contact your Donor Engagement Officer or email support@nccommunityfoundation.org.   

	1-Year	3-Years	5-Years	10-Years	15-Years
All Managers (Net Weighted)	11.0%	2.3%	7.0%	6.6%	7.7%
NCCF Investment Fund	10.5%	1.6%	6.7%	5.9%	7.0%
Benchmark – Broad	12.4%	3.2%	7.1%	7.0%	7.3%
Benchmark – Diversified	10.0%	3.1%	6.8%	6.7%	7.2%
Benchmark – Blended	12.3%	3.4%	7.7%	7.6%	8.7%
Benchmark – Broad: This benchmark represents a general approach to investment. 70% MSCI All Country World Equity Index, 30% Bloomberg Barclays Aggregate Bond Index.
Benchmark – Diversified: This benchmark represents a diversified approach to investment with material allocations to a combination of private equity, private debt, and alternative investments. 24% MSCI ACWI ex US, 20% S&P 500, 10% Russell 2500, 18% Bloomberg Barclays Aggregate Bond Index, 10% HFRI FOF index, 6% MSCI Infrastructure, 6% Cambridge Private Equity, 4% Barclay CTA, 2% Cambridge Private Debt
Benchmark – Blended: This benchmark represents a diversified approach to investment in public markets. 35% R1000, 15% Russell Midcap, 5% R2000, 10% MSCI EAFE Net, 30% Barclays Govt/Credit Bond, 5% FTSE Treasury Bill 3 Month.

Note: Multi-year percentages are annualized. Returns are net of investment fees.