Summetric Capital | Newsletter
Dear reader,
Through this newsletter, we would like to update you on Summetric Capital's recent developments, the market and our outlook. Summetric Capital is an equity fund focused on the US market, using a data-driven and systematic approach. Our goal: an optimal balance between capital protection in down markets and returns in up markets.
In brief:
1. Result achieved Summetric Capital achieved a net return of 7.44% in 2024. The year 2025 started positively, with a net return of 2,33% in January. View our February fact sheet, which further explains our strategy, achievements and vision, here: Factsheet
2. Market analysis In this newsletter, we discuss key developments in the US stock market and share our expectations.
3. Discover the possibilities of data-driven investing Want to know more about our approach? Schedule a no-obligation coffee or phone appointment with one of our fund managers via this: Link. Warm regards,
Team Summetric Capital
Maliebaan 48
3581 CS Utrecht
info@summetric-capital.com
(030) 2083 073
Summetric Capital has a 2024 net return from 7,44% realised. The year 2025 we started positively with a net return of 2,3% in January. The table below shows the progression of returns and the compound return since inception. Since the fund's inception, the annualised volatility 12.2%, reflecting the degree of movement in returns.
For an overview of our strategy, performance and investment philosophy, we have summarised key information in our latest factsheet. In it, you will find not only an overview of our monthly returns, but also other fund details.
📄 View February's fact sheet here: Factsheet
The 2024 stock market year was marked by remarkable market developments and strong returns, especially in US equity markets. The S&P 500 index rose with 25%. These achievements were largely due to the Magnificent Seven: Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta and Tesla. Together, these seven tech giants accounted for almost half of the total gains in the S&P 500.
Looking beyond these megacaps, however, it appears that market-wide performance, in 2024, was considerably more modest. The equally weighted S&P 500 index, with each company having an equal weighting, increased by 13%. Smaller companies also lagged behind: the S&P 600 (small cap) rose by 8,1%, the S&P 400 (mid-cap) with 13,9%, and the Russell 2000 index (small cap) ended at 11,5%.
This pattern was not unique to 2024. In 2023, we saw similar dynamics, with the S&P 500 index, 25,9% rose, but the equally weighted S&P 500 again on only 13,2% stuck. Also small-cap and mid-cap indices then performed significantly less well, with gains of 15,4% (S&P 600), 16,4% (S&P 400) and 16,9% (Russell 2000).
In the first quarter of 2024, financial markets maintained the line started in 2023, with a further advance in technology stocks. This focused on the huge impact artificial intelligence will have on the economy and corporate profits. Chip manufacturer Nvidia is a model for this movement. The company is by far the largest and most important developer of powerful chips needed for complex AI tasks. Nvidia's share price, after a lucrative 2023 (+239%), rose another 82% in the first quarter of 2024.
The chart below clearly shows the difference in performance between the various indices since the start of 2023. It shows that the equally weighted S&P 500 and the Russell 2000 have lagged behind compared to the S&P 500 over the past two years.
Cumulative return by Index 2023 to 2024Equally weighted S&P 500, Russell 2000, S&P 500
Sector winners and losers in 2024
The year 2024 was impressive for the US stock market, but not all sectors benefited equally. Below are the winners and losers by sector.
🏆 Top performers:
Communications Services (+38.9%): Meta (+66%) and Alphabet (+36%) benefited from strong ad revenues and sustained consumer demand.
Technology (+35.7%): The AI revolution propelled Nvidia (+171%) and Apple (31%) to new heights.
Consumer Goods Discretionary (+29.1%): Robust consumer spending helped companies like Amazon (+44%) and Tesla (62.5%) advance.
📉 Stragglers:
Materials (-1.8%): performed poorly in 2024 due to global economic slowdown, weaker demand from China, rising production costs and hence lower profit margins.
Healthcare (+0.9%): In 2024, this sector lagged due to market preferences and political uncertainty, especially around former President Trump's policies. Fears of sweeping healthcare reforms put pressure on prices and margins, limiting the profitability of many companies.
The table below shows how different sectors have performed in 2024, over the past five years and the past decade. While past returns are no guarantee for the future, a strong performance in a particular year does not guarantee that a sector will continue to rise. Conversely, a weak year does not necessarily mean that a sector will continue to perform poorly. Sectors that have lagged recently often have lower valuations and thus offer more room for recovery and growth. As no one can predict exactly which sector will perform best in the coming year, broad sector allocation remains essential to mitigate risks. After all, investing is a marathon, not a sprint race - it's about the long term, not the outliers of a single year.
The pie charts below show how Summetric Capital's portfolios are spread across sectors. This spread contributes to resilience in different market conditions
"Height fears after Strong Rally - Goldman Sachs warns of correction risks"Although the US stock market showed strong returns in 2024, analysts warned of possible overvaluation. Goldman Sachs noted that US stocks are "priced for perfection" and vulnerable to a correction, given high valuations and the concentration of market gains in a handful of technology companies. Diversification and caution therefore remain essential for investors navigating the current market dynamics. Read the entire article here: Global stocks are vulnerable in 2025.
Howard Marks on bubble formation and market dynamics
In his recent memo On Bubble Watch Howard Marks looks back at the infamous dotcom bubble of 25 years ago and analyses whether we are now in a bubble again. He discusses the rise of the "Magnificent Seven"-Apple, Microsoft, Google, Amazon, Nvidia, Meta and Tesla-which together represent an unprecedented concentration of the S&P 500.
Marks stresses that a bubble is not just about high valuations, but mainly about extreme investor psychology: irrational euphoria, FOMO and the idea that "no price is too high". He compares the current market situation to previous bubbles, such as the dotcom crash and the housing market crisis, and wonders whether investors are now once again overly optimistic about growth prospects. Read the whole article here: On Bubble Watch.
Investment outlook
The current US stock market is dominated by a small group of stocks with exceptional performance. This has led to an increased concentration of risk and the threat of bubble formation in specific sectors. The dominance of mega-caps within broad indices makes the market vulnerable: if a correction comes, the consequences for passive investors who rely heavily on market-capitalisation-weighted indices (S&P 500, MSCI world) will be significant.
At the same time, small-cap stocks and several sectors continue to lag behind. Historical patterns show that after a long period when a narrow group of growth stocks leads the market, investors often reorient and other segments gain ground. This presents opportunities for investors positioning themselves in a more balanced portfolio.
At Summetric Capital, we see current market conditions as a clear reason to embrace diversification as a core strategy. We maintain a balanced spread across sectors to avoid excessive concentration. Our focus is on 'quality compounders' with a defensive bias. We also maintain a structural short portfolio as protection against down markets, focusing on stocks with a higher risk profile. This approach allows us to limit losses during market downturns, while being able to capitalise on opportunities across a broad pallet of the market.
Schedule an introduction
Wondering how our data-driven strategy can strengthen your portfolio? Investing is possible from €100,000 onwards. We would like to invite you for a personal discussion over a cup of coffee or a phone appointment at a time that suits you.
📅 Schedule an appointment directly via this Link
Or respond to this e-mail and we will be happy to get in touch with you. We look forward to engaging with you!
Warm regards,
Team Summetric Capital
Maliebaan 48
3581 CS Utrecht
info@summetric-capital.com
(030) 2083 073
