💡 (317% in 23 years) Expect Higher Returns 👇
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🎯 (317% in 23 years) Expect Higher Returns 👇
Led by convalescent equity markets, the Global Market Portfolio (GMP) is recovering slowly, but steadily, after an abysmal 2022.
Given the extremely challenging market conditions in 2022, the GMP has seen a significant drop in value from USD 181.1 trillion in December 2021 to USD 153.5 trillion in December 2022. It started to recover at the beginning of this year to see a rise in H1 2023, reaching USD 164.5 trillion as of the end of June 2023.
WHAT IS THE GLOBAL MARKET PORTFOLIO?
The idea of a global market portfolio - a portfolio of all risky assets proportionally weighted by their market capitalization - was originally proposed by James Tobin in 1958 and subsequently refined by William Sharpe in 1964.
The GMP’s total worth can be estimated at USD 164.5 trillion (as of June 2023), an increase of USD 11 trillion since December 2022, but still a decline of USD 16.6 trillion since December 2021.
Equities represent the largest asset class, with a market value of USD 69.8 trillion, which equals 42.5% of the total market capitalization of all asset classes.
Core bonds of good quality represent USD 63 trillion, which equals 38.3% of the total. It embraces government bonds and investment grade (IG) credit, with a market value and weight of USD 38.7 trillion and 23.5%, and USD 24.3 trillion and 14.9%, respectively.
WHAT’S AHEAD?
Looking ahead, market conditions continue to be uncertain and will remain challenging for the foreseeable future: inflation is still too high, albeit on the right downtrend trajectory in Q3 2023, and central banks are expected to remain hawkish, keeping short-term rates higher for longer.
MARKET VALUE OF GMP
The evolution of the total capital value of the GMP over time, which shows an increase of 317% from December 2000, when it was valued USD 39.5 trillion, to USD 164.5 trillion in June 2023. The impact of 2022 is very visible.
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Disclosure
This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. This material has been prepared for informational purposes only. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.