The year 2024 was marked by significant political upheaval and global challenges. In the Middle East, the conflict between Israel and Palestine escalated once again, increasing tensions in the region. In the US, the re-election of Donald Trump led to a significant shift in direction, which is attracting a great deal of international attention. In Germany, the coalition government collapsed, leading to an early general election in February 2025.

Furthermore, inflation rates in Europe and the US fell noticeably, allowing central banks to lower key interest rates further. These measures aimed to stimulate the economy and stabilise the markets.

The four main themes of the 2024 annual report are as follows:

• Performance: Our strategy with the highest allocation to equities, "Global 10", has achieved an impressive performance of 108% since its launch in 2016. This report highlights not only recent developments but also how our strategies help investors benefit sustainably from global market developments.

  
  

• Inflation and interest rate policy: Over the course of 2024, inflation rates in Europe and the US didn't just reach the central banks' target marks, but in some cases even fell below them. The ECB and the Fed reacted to this development with a noticeable cut in interest rates and initiated the end of the high-interest phase. You can find out what impact these monetary policy measures had on the capital markets in this report.

  
  

• Global influences: The year 2024 was characterized by major political events that caused uncertainty and movement in markets worldwide. The renewed escalation of the Middle East conflict heightened geopolitical tensions, while Donald Trump's re-election in the US initiated a shift in direction in global politics. At the same time, the failure of the coalition government in Germany led to domestic political instability. You can find out what impact these developments have on capital markets in this report.
  
  

• Company development: The annual report also provides exciting insights into Ginmon's progress in 2024. Just in time for our tenth anniversary, we released a major update to our platform. As another highlight, we announced a successful collaboration with Europe's second-largest neobank, "bunq". With its approximately 15 million retail customers, "bunq" is now relying on Ginmon's technology to offer its own clients wealth management and brokerage solutions.

How have our strategies performed?

In the fourth quarter of 2024, the Ginmon investment strategies continued their positive trend and closed the year with an impressive performance. The cumulative returns of the portfolios (Global 1 to Global 10) reached up to 15.7%. Strategies with a high equity component, such as Global 10, were once again able to post significant gains.

Despite interest rates remaining high in 2024, the clear superiority of equity-based strategies compared to the money market, i.e., Ginmon TopZins, was also evident past year. With an annual return of 3.7% before costs, Ginmon TopZins nevertheless represented a safe and significantly more attractive alternative to classic instant-access and fixed-term deposit products.

Despite the very positive performance of our strategies, some of them remained slightly behind US- and technology-heavy benchmarks such as the MSCI World or the S&P 500. This difference is explained by our factor investing approach, which is based on proven scientific principles and relies on a higher weighting of the factors "Value" and "Size" as well as a GDP-weighting of world markets. As a result, the USA and specially large technology stocks are less represented in our "Global" strategies, which generated the highest returns in 2024. Even though the factors mentioned did not yield the expected excess returns in recent years, scientific evidence suggests that these factor premiums can be expected to return in the future.

The following chart shows that both the Value and the Size premium have generated a negative premium over the past 10 years. It is therefore possible that, due to this lower performance over the longer term, the future additional premium could be disproportionately high. In light of this, we are convinced that our factor investing strategies are optimally positioned to exploit this future potential.

Recent events in January 2025 also underline the dynamics in the technology sector. The Chinese AI start-up DeepSeek has developed a new AI model that runs at significantly lower costs and energy consumption compared to OpenAI's models, while still beating them in numerous benchmarks. Nvidia's share price subsequently plunged by almost 17 per cent, representing a loss in value of around 600 billion US dollars. In US dollar terms, this is the largest single-day loss for an individual stock in Wall Street history. Numerous other technology stocks were also affected, and so this example serves as a reminder that instead of outperformance in the technology sector, an underperformance of the tech sector is just as possible in the future.

In the long term, Ginmon strategies benefit from diversification - as proven by the 5-year performance of 44.8%. The 1-year performance also impressively shows how the strategies developed over the course of 2024. With a return of up to 15.7% (Global 10), the Ginmon portfolios have proven that attractive results can be achieved even in a challenging market environment.

The results clearly show that long-term oriented investors benefit from broad diversification and a clear strategy. Especially in a 5-year comparison, it becomes apparent that patience and foresight are crucial for sustainable success.

Since its launch in 2016, the Global 10 strategy has achieved an impressive gain of 108%, which represents more than a doubling of the invested capital. This consistent performance is based on a clear, scientifically sound investment strategy that relies on concepts such as factor investing, active risk management, and anti-cyclical rebalancing.

Even in a market environment shaped by uncertainties, such as during the Corona crisis in 2020, the Ukraine conflict since 2022, or the flare-up of the Middle East conflict from 2023, broad diversification across asset classes (equities, bonds, commodities, and real estate) as well as ongoing risk management have proven effective. The Ginmon "Global" strategy series thus offers investors a reliable way to benefit from the opportunities of capital markets in the long term, according to their desired risk profile.

What's next for inflation and interest rates?

Inflation rates in the Eurozone and the US have dropped significantly from their peak in 2022 and gradually stabilised in 2024. In the first half of 2024, inflation rates showed a clear downward trend, with the annual inflation rate in the Eurozone at 1.8% in June, before rising slightly again in the third quarter. In December 2024, however, the annual inflation rate in Germany rose to 2.2%, after standing at 1.6% in September. In the Eurozone as a whole, the annual inflation rate rose to 2.4% in December 2024, up from 1.7% in September, dropping by 0.5 percentage points year-on-year compared to 2.9% in December 2023. With this trend, the European Central Bank largely met its inflation target of 2% over the course of the year.

In view of this development, the ECB made several interest rate cuts in 2024. As early as June 2024, the ECB cut its key interest rate by 0.25 percentage points to 3.75%, followed by two further cuts in September and October to 3.5% and then to 3.25%. On 12 December 2024, the ECB Governing Council decided on a further 25 basis point cut to each of the three key interest rates, taking the ECB deposit rate to 3.0%.

The US Federal Reserve also reacted to falling inflation and cut its key interest rate by 0.25 percentage points in September 2024, followed by another adjustment in November to a target range of 4.25% to 4.50%. These monetary policy measures led to a stabilisation of markets and a clear upward trend in equity indices in the US and Europe.

Interest rate cut

Current projections show that interest rates in the Eurozone could level off at around 2% in the medium term. This would be a return to a "normal" interest rate environment with a real interest rate (after adjusting for inflation) near zero. Such an interest rate level forces investors to invest medium- to long-term liquidity productively in the capital market in order to achieve a positive real return.

What moves the markets

US election

Following Donald Trump's election victory in November 2024, the capital markets initially responded with relatively significant moves. At the same time, the US Dollar Index rose by 1.1% and the yield on 10-year US Treasury bonds rose by 9 basis points to 4.38%.

These initial market reactions reflected investor expectations that Trump's business-friendly policies, including planned tax cuts and deregulation, will stimulate economic growth. However, the initial euphoria was followed by a phase of consolidation, in which markets assessed the potential risks and uncertainties of another Trump presidency. Markets quickly stabilised and the initial fluctuations proved temporary.

Even though the US economy has performed exceptionally well recently, this is not a reliable indicator for future performance. In particular, it should be kept in mind that the majority of S&P 500 returns are attributable to the "Magnificent 7" technology stocks. Furthermore, Trump's pro-business policies can be considered largely priced in and thus do not provide an argument for overweighting US markets.

In the long term, trends in capital markets show that while political events such as a change of government can trigger short-term volatility, fundamental market trends and dynamics remain largely intact. For investors, it is therefore advisable to stick to proven investment strategies and focus on long-term goals rather than reacting to short-term market movements. A diversified investment strategy based on fundamental analysis remains the key to success, regardless of political changes.

End of coalition and snap elections

The end of the coalition government in Germany in November 2024 and the announcement of new elections in February 2025 initially moved capital markets in a surprisingly positive direction. The DAX responded with a rise of more than 2% as investors viewed the development as an opportunity for economic recovery and stronger fiscal policy measures. This reaction reflects market confidence that a new government could create pro-business conditions.

Companies in the defence and energy sectors benefited in particular, while bond markets remained stable. Furthermore, it appears that conservative and market-liberal forces are gaining influence in Europe, which could potentially impact future economic conditions. How these forces will affect capital markets in the long term, however, remains to be seen.

Despite political uncertainty, markets have shown that they adjust quickly to potential changes and keep their eyes on long-term economic prospects. For investors, it is important to recognise that while political events can trigger short-term market movements, other factors such as corporate earnings, technological developments, and global economic trends play a larger role in the long run. A broadly diversified portfolio can help minimise risk and harness opportunities across different market phases.

Middle East

Recent developments in the Middle East, particularly in Syria, have once again drawn the attention of the international community. Following the overthrow of long-time ruler Bashar al-Assad in November 2024, the country is in a political transition phase. The Islamist rebel group Hayat Tahrir al-Sham (HTS) has seized control and is working on forming a transitional government. However, the humanitarian situation remains precarious. At the same time, regional conflicts have evolved. Israel and Hamas agreed to a ceasefire that came into effect on 19 January 2025, providing for a six-week truce and humanitarian measures.

A temporary ceasefire is also in place in Lebanon, brokered by international actors to ease tensions. Nevertheless, the humanitarian situation remains critical and the region's stability continues to influence global markets.

In the past, geopolitical events such as political unrest or conflicts have led to short-term volatility in financial markets. However, analyses show that such events rarely have a long-term negative impact on broadly diversified portfolios. A diversified investment portfolio can help minimise risks and achieve stable returns even in times of political uncertainty. 

While it is generally correct to follow political developments closely and identify potential risks, investors should still pursue a long-term investment strategy independently of short-term geopolitical events. A long-term, diversified investment strategy remains the best way to achieve stable returns across various market cycles.

Company developments

In 2024, Ginmon was once again able to expand its position as one of the leading digital asset managers and demonstrate its innovative power. After Ginmon was already crowned Number 1 by CAPITAL in 2023, we made it to the podium again this year. Furthermore, our solutions, such as Ginmon VL, continue to be listed as a top recommendation by Finanztip in 2024.

Ginmon stands out in a challenging market environment because, unlike many tech and fintech companies, we operate profitably and cost-efficiently. With a solid and long-term strategy, we have now been creating sustainable added value for our clients for more than 10 years.

A particular highlight is the use of our technology platform beyond Ginmon. Since September 2024, our technology platform has also been deployed with Europe's second-largest neobank, "bunq" from the Netherlands. The approximately 15 million retail customers of "bunq" now have access to modern investment solutions from Ginmon, fully integrated into the "bunq" app. This project once again proves Ginmon's technological leadership. In addition, this project also enables many new insights and the development of new features, which can be made available to our direct retail clients in the future.