January 2025
PERFORMANCES 2024
FFM American Growth Fund
+14.37% versus +14.98% for the Dow Jones Industrials and +26.32% for the S&P 500
+12.95% annualized or +108.17% since 01.01.2019
FFM European Selection Fund
+3.19% versus +5.38% for the Stoxx Euro 600 and +7.61% for the Euro Stoxx 50
+12.07% annualized or +98.52% since 01.01.2019
FFM Global Quality Portfolio
+16.63% versus +24.88% for the MSCI World
+12.98% annualized since inception (25.08.20)
FFM Swiss & Nordics
+2.07% against +2.10% for the SMIM
+4.42% annualized since inception (25.10.22)
Dear Friends, Dear Investors,
A new year starts, and we take this opportunity to send you our best wishes for 2025!
It is also a time to reflect on our performances for the past year. 2024 was both interesting and, in the end, complex for our investment philosophy, with a slight lag for our various funds compared to the indices, both in Europe and the United States.
We have already gone through similar periods in the past and are not surprised. Several factors can explain this performance. First, there is the impact of the major tech companies (Apple, Microsoft, Nvidia, Alphabet, Amazon, Tesla, Meta) and the weight they represent in certain U.S. indices, such as the S&P 500 (where over 30% is composed of these same stocks), for example.
There is also the impact of the financial sector, which, for once, has been among the best-performing in 2024, both in Europe and the U.S. Since we rarely hold shares in banks or insurance companies, this had a negative impact on our results throughout the year, although historically, our lack of exposure to this sector has generally been favorable.
It is especially interesting to note the marked performance divergence between our investments in Europe and the U.S., likely the largest since we started managing funds. Our management results are usually relatively similar, regardless of the geographical zone, because we select stocks based on the same fundamentals, which generally offer the same potential for value creation. That was not the case in 2024. The "Magnificent Seven" are, of course, one of the main reasons for this. Indeed, when one looks at the grandfather of US indices, the Dow Jones Industrials Index, considered to be the most representative of the U.S. economy in general and not just the largest capitalizations, its performance has been close to that of European markets.
Our exposure to certain French companies is probably another explanation. Indeed, political uncertainties surrounding the new French budget have weighed on the performance of companies like Vinci and Air Liquide, which are usually quite stable in terms of stock price evolution. Not to mention the impact of the slowdown in China on the luxury sector, the main driver for the French stock market, with companies like L'Oréal and even Hermès (although the latter has performed much better compared to LVMH, for example). Lastly, Trump’s protectionist announcements also had an impact on the European market more generally, with concerns about economic prospects.
We do not believe this divergence will continue in the years to come. In fact, the annualized performance of our European and U.S. funds remains nearly aligned over the past 5 years (between 12% and 13% annualized). As mentioned, this is mainly due to investment criteria that remain similar, regardless of the geographical zone. The stocks in our portfolios have very comparable profiles, and their place of listing (often their historical home market) has little impact on their ability to create value in the long term. They are global companies, with the majority of their revenue often generated internationally.
So, what can we expect for 2025? There will undoubtedly be several important events to watch, starting with the Trump II era, which seems to have already been largely priced by the end-of-year stock market performance. We will also closely follow further developments around Artificial Intelligence, monetary policies on both sides of the Atlantic, the evolution of the Chinese economy, and the governmental budgets of certain European countries in particular. As always, we cannot expect a smooth ride, but our strategy remains unchanged. We are still in a secular bull market, currently mainly driven by Artificial Intelligence, and this momentum should last for a few more years. We would not be surprised to see some changes in the development of indices and their key stocks in 2025, which should provide more favorable conditions for our investment methodology.
The long-term strategy of investing in growth and resilient companies remains our preferred approach. We will see what the new year holds in store. We look forward to starting it with you and will give you a first update on the coming weeks at the beginning of February, in our next newsletter.
Best regards,
Your CaridaB Group Team
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