News & Insights

ARC Research Commentary Review of 2023

03 January 2024, Graham Harrison

2023 A Year in Review

The year 2023 ended with a strongly positive quarter for financial markets and thus, for the twelve month period as a whole, nominal returns for private client investors were a little above average.

That was most welcome after the bond and equity market traumas of 2022, when the vast majority of private clients experienced significantly negative returns. But, generally, 2023 gains have not fully compensated for 2022 losses.

Key Takeaways

  • Bond markets seemed to offer reasonable value and, despite tighter monetary policy and the threat of recession, company profits proved resilient
  • The breadth of equity market gains was extremely narrow, the rise in the world equity market index being driven by the 10 largest US listed “mega cap” stocks
  • In 2023, private clients following Sterling Steady Growth mandates recorded, on average, nominal returns of 7.3%, just above the historical average of 6.0% per annum
  • The maximum drawdown during 2023 of -6.3% was unexceptional and less than the average of -9.0% over the 20-year history of the indices
  • The picture is considerably less rosy once the impact of inflation is taken into account with real wealth declining 15% since 2021 despite a real return for 2023 of 3.6%