Best Investment Returns 2024

Investment markets in 2024 delivered exceptional returns across multiple asset classes. Leading the way, commodity investments saw unprecedented gains, with WisdomTree's cocoa and coffee products achieving returns of 283% and 89% respectively. The tech sector followed with blockchain and semiconductor funds exceeding 54% returns, while traditional sectors like UK equity income and bonds provided stable double-digit growth. This analysis covers the year's highest-performing investment vehicles, from ETFs to investment trusts.

Top Investment Performers 2024 - Cross-Category Comparison

Key Observations:

• Soft commodities significantly outperformed other categories in the market

• Technology sector showed strong returns, particularly in specialised themes around AI

• Top UK income and bond funds delivered solid double-digit returns

• Healthcare showed more modest returns compared to other sectors

Commodities

In 2024, commodity investments have delivered exceptional returns across multiple providers. WisdomTree leads with standout performances in agricultural commodities. Baker Steel Resources Trust, HAN-GINS, and VanEck have achieved strong returns in resources and energy, while major institutions including Invesco, iShares (BlackRock), and Amundi have seen consistent returns of around 28% in their gold ETCs.

Commodities are raw materials used to manufacture consumer products and encompass a wide variety of goods, such as grains, metals, natural gas, and cattle. They can be divided into two sub-categories: hard and soft. Hard commodities are often natural resources extracted from the ground, while soft commodities are agricultural products or livestock.

Cocoa beans have been the standout performer of 2024, with WisdomTree's Cocoa ETF returning over 280% year-to-date, following a 60% rise in 2023. This performance comes amidst significant global shortages, with West Africa, responsible for roughly two-thirds of global production, being severely impacted by extreme weather and diseases that are destroying harvests.

The bottom half of the list comprises various gold-tracking ETFs from different fund managers. Gold has been a popular choice with investors throughout 2024, registering its fourth double-digit return and fifth positive year in the last six. Amidst the Covid-19 pandemic, war in Ukraine, conflict in the Middle East, rising inflation, and the cost of living crisis experienced over the past half-decade, the stability of gold has provided a safe haven for investors and continues to yield positive returns.

Mahdi Shabir, CFAResearch Manager, Boring Money

Data provided by FE fundinfo, correct as at 29th December 2024

Tech & Tech Innovation

Tech sector investments have shown robust performance in 2024, with specialised thematic ETFs outperforming broader tech sector funds. Amundi's semiconductor ETF leads returns followed closely by VanEck and WisdomTree's blockchain-focused products. The gaming sector also demonstrated strong performance through VanEck's eSports ETF. More traditional tech and communication sector ETFs from providers like Invesco, iShares, and First Trust showed solid but lower returns in the 39-44% range

The Magnificent 7 continue to impress, with Nvidia delivering remarkable growth throughout 2024 and Tesla experiencing a surge in the past few months following Donald Trump's election win. Elon Musk's fortunes are often intertwined with cryptocurrency, given his strong sentiment on the matter. Bitcoin has had an exceptional year in 2024, approaching the $100,000 mark (approximate value of one Bitcoin) in December and doubling in value over the year. Artificial Intelligence has been a prominent topic over the past couple of years, and most of the top-performing funds in this sector are connected to this concept, whether through Blockchain, semiconductors, or the IT/communications sector.

Mahdi Shabir, CFAResearch Manager, Boring Money

Data provided by FE fundinfo, correct as at 29th December 2024

Pharma, Health and Biotech

Healthcare investments have shown modest returns in 2024, with specialised biotech exposure through Schroder's trust delivering the strongest performance. Polar Capital's suite of healthcare funds, particularly their Opportunities and Global Healthcare Trust, have outperformed passive alternatives. Traditional healthcare sector ETFs from major providers like Xtrackers, Invesco, iShares, and Amundi have clustered around 3-4% returns, while thematic healthcare innovation ETFs have slightly underperformed.

The healthcare sector has had a modest year compared to other sectors, with investors opting to allocate funds to areas like technology and AI instead. After a strong performance in 2021 amidst the Covid-19 pandemic, the sector's overall performance has lagged behind its counterparts. However, many analysts believe this has created strong opportunities for investors, allowing them to invest at price points below the true fair value.

One example is Moderna, which is down 64% this year and trading at approximately $40 per share. Morningstar's fair value estimate for this stock is $140, indicating significant potential upside, although they have classified their uncertainty rating about their own valuation as very high. The recent performance of top pharmaceutical stocks has varied significantly, with Eli Lilly up 32% year-to-date, while Johnson & Johnson and Pfizer are down 9% and 10% respectively. Funds are a good way to access the sector without taking on the same concentration risk as buying individual stocks.

One reason behind the current uncertainty in the sector is Donald Trump's appointment of Robert F. Kennedy Jr. as head of the Department of Health and Human Services. Kennedy Jr. is a critic of traditional health services, and it is unclear what policy changes will be made and their impact on the sector in the near term. However, with an ageing population, there is vast potential that could still be unlocked. Over the past half-century, health expenditures have been steadily increasing as a percentage of GDP, and the healthcare sector is now the third-largest sector in the S&P 500, making up approximately 10% of the index.

Mahdi Shabir, CFAResearch Manager, Boring Money

Data provided by FE fundinfo, correct as at 29th December 2024

UK Equity Income

UK equity income and value investments have delivered robust returns in 2024, with actively managed strategies from Redwheel and JOHCM leading the pack. Investment trusts like CT UK High Income and Diverse Income Trust have also performed strongly, while L&G's ESG-focused ETF has kept pace with traditional value approaches. The performance spread is relatively tight, with all funds delivering between 12-20% returns.

Income funds focus on providing an attractive return in the form of dividends and capital repayments, as well as capital growth more generally, and are often favoured by investors looking to draw some kind of income from their portfolio. Income only yields vary for each option, however, most of the investments in this list are paying back between 3% - 6% per year.

After a good first half of the year, UK equity returns have been pretty stagnant over the last 6 months, lagging behind its US counterpart. However, with a host of M&A activity in the UK economy this year, there is a widespread view that the UK stock market is undervalued, after stalling in the wake of Brexit and more recently Covid.

Mahdi Shabir, CFAResearch Manager, Boring Money

Data provided by FE fundinfo, correct as at 29th December 2024

UK Bonds

UK-based fixed income investments have shown strong returns in 2024, with Man Group's funds leading the way. All the funds included in this list have the majority of their assets in high-yield corporate bonds, which are typically more lucrative than gilts, although they do come with a much higher chance of the institution defaulting on their debt.

Bonds have had a strong year in 2024 after experiencing significant challenges in 2022 due to political uncertainty and substantial interest rate increases. Bond prices are inversely related to interest rates, meaning that rising interest rates negatively impact bond values, while interest rate cuts positively affect them. For example, if a bond offers a 5% annual return and the interest rate drops to 4%, the bond's 5% return becomes more valuable and can be sold at a higher price. Conversely, if interest rates rise to 6%, the 5% return is less attractive, and the bond would need to be sold at a discount to be competitive with new bonds offering higher returns.

There are many types of bonds, with two core categories being government bonds and corporate bonds. Government bonds are essentially loans to the government, with the promise that the government will repay the principal amount at the end of the agreed term, along with periodic interest payments, known as coupons. Corporate bonds operate similarly, but the agreement is with a corporation instead. Smaller, less stable companies are more unreliable and therefore need to offer higher coupons to attract investment into their bonds.

Credit rating agencies assign grades to governments and companies seeking to raise financing through bonds. Bonds issued by institutions with lower ratings are known as high-yield bonds. These bonds tend to be riskier but offer higher returns.

Mahdi Shabir, CFAResearch Manager, Boring Money

Data provided by FE fundinfo, correct as at 29th December 2024

What This Means for Investors

The 2024 investment performance data reveals several key insights that investors should consider for their portfolio strategies:

Diversification Remains Critical

While commodities, particularly agricultural products like cocoa and coffee, delivered extraordinary returns, these performances highlight both the potential and volatility of commodity investments. The stark contrast between cocoa's 283% gain and more modest returns in other sectors reinforces the importance of maintaining a diversified portfolio rather than chasing exceptional performers.

Thematic Tech Investments Outperform Traditional Tech

The success of specialised technology ETFs, particularly in blockchain and semiconductors, suggests that targeted exposure to specific tech themes may offer greater potential than broad tech sector investments. However, investors should carefully consider their risk tolerance, as these specialised funds often carry higher volatility and come with a greater risk of mispricing in the market. The narrower you go in terms of focus, the greater the concentration risk, and the more you are exposed to potential pitfalls.

UK Markets Show Resilience

The solid performance across UK equity income funds and bonds demonstrates that traditional value and income strategies remain viable in the current market environment. This is particularly relevant for income-focused investors seeking regular payouts alongside reasonable returns.

Active Management Adds Value in Certain Sectors

The strong performance of actively managed funds, particularly in UK equity income and healthcare sectors, suggests that professional stock selection can add value in less efficient or more complex markets. However, this benefit varies significantly by sector.

Looking Forward

While past performance doesn't guarantee future returns, these trends suggest investors might benefit from:

• Maintaining core positions in traditional assets while selectively adding thematic exposures

• Considering active management in sectors where it has demonstrated value

• Adjusting between or incorporating both growth and value strategies to capture different market opportunities

• Retaining some asset allocation in the UK, as part of a well-balanced, diversified portfolio

• Remaining mindful of position sizing, particularly in high-performing but volatile sectors, or niche sub-sectors like soft commodities