This is part of our quarterly plan performance series. Catch up on last quarter’s summary here: How PensionBee’s plans are performing in 2024 (as at Q2).
As we near the end of 2024, it looks like it will be a noteworthy year. Recent data from the Office for National Statistics (ONS) shows that UK inflation is at 1.7% in September, the lowest in over three years. Over in the US, inflation has also dropped for six consecutive months to 2.4%. These trends indicate a stabilising economy, which can boost investor confidence and positively affect pension funds. Given the fear of global recession making headlines in recent years, this apparent ‘soft landing’ from the volatility of 2022 should be reassuring news for savers.
The Federal Reserve cut interest rates to a range of 4.75% - 5%, marking the first reduction since the COVID-19 pandemic began in March 2020. Meanwhile, the Bank of England has kept its Bank Rate at 5%. When interest rates go down, the prices of existing bonds usually go up. This is because new bonds are issued with lower yields, making the older bonds with higher yields more appealing to investors. This is positive news for customers with longer-dated bonds in their pension, such as our Tailored Plan vintages closest to retirement.
Most pensions are heavily invested in company shares across the globe. If we rewind back to July, Japan’s Nikkei 225 Index seemed poised to lead global indices with the US’s S&P 500 Index trailing closely behind. However, growth for the Nikkei 225 has slowed in the last quarter. This was linked to the country’s incoming Prime Minister and concerns about maintaining high interest rates. For context, around 6% of the equity portion of our Tailored (Vintage 2043 - 2045) Plan is invested in Japan.
On the other hand, China’s Hang Seng Index began the year slowly and has since surged impressively following the Chinese government’s easing of restrictions. By the end of September, the Hang Seng had taken the lead as the best-performing major index of 2024, followed closely by the US’s S&P 500 Index. Why does this matter? Asia (excluding Japan) makes up around 11% of the equity portion of the Tailored (Vintage 2043 - 2045) Plan.
Keep reading to find out how global markets and our PensionBee plans have performed over 2024 so far.
2024 performance figures cover the period between 1 January and 30 September 2024 only.
This blog is only meant to provide information. The data comes from our money managers or plan factsheets. Performance figures are before fees. Past performance isn’t an indicator of what will happen in the future. As with all investments, capital is at risk.
Company shares in 2024 (as at Q3)
What are company shares?
Company shares are units of ownership in a company. When a company wants to raise money, it can issue shares to investors who pay a certain amount of money for each share. By buying shares, investors become part-owners of the company and can enjoy its profits or growth. But, they also take on the risk of a decline in share prices if the company performs poorly or even goes bankrupt. Company shares are also known as ‘stocks’ or ‘equities’, and they’re commonly traded on stock markets.
Global stock markets
In the Eurozone, shares performed well, particularly in real estate and healthcare. Over in the UK, company shares rose after the Labour Party’s election win, but concerns about a tough Autumn Budget and rising taxes tempered optimism.
In the US, company shares grew. But the performance across industries was a mixed bag: with investors preferring the stability of utility companies over the excitement of the technology sector.
Japan’s stock market saw high volatility, with a significant drop after the Bank of Japan raised interest rates, but it stabilised later as fears eased. In Asia, markets outside Japan saw solid gains - especially China due to government stimulus.
| Index | Investment location | Performance over 2024 (%) | Equity proportion (%) |
|---|---|---|---|
| FTSE 250 Index | UK | +6.9% | 100% |
| EuroStoxx 50 Index | Europe (excluding the UK) | +10.6% | 100% |
| S&P 500 Index | North America | +20.8% | 100% |
| Nikkei 225 Index | Japan | +13.3% | 100% |
| Hang Seng Index | Asia Pacific (excluding Japan) | +24.0% | 100% |
Source: BBC Market Data
PensionBee’s equity plans
| Plan | Money manager | Performance over 2024 (%) | Equity proportion (%) |
|---|---|---|---|
| Shariah Plan | HSBC (traded via State Street Global Advisors) | +19.3% | 100% |
| Fossil Fuel Free Plan | Legal & General | +12.5% | 100% |
| Impact Plan | BlackRock | +8.1% | 100% |
| Tailored (Vintage 2061 - 2063) Plan | BlackRock | +12.4% | 100% |
| Tailored (Vintage 2055 - 2057) Plan | BlackRock | +12.4% | 100% |
| Tailored (Vintage 2049 - 2051) Plan | BlackRock | +11.8% | 96% |
| Tailored (Vintage 2043 - 2045) Plan | BlackRock | +10.7% | 85% |
| Tracker Plan | State Street Global Advisors | +12.7% | 80% |
| Tailored (Vintage 2037 - 2039) Plan | BlackRock | +9.5% | 72% |
| 4Plus Plan | State Street Global Advisors | +9.4% | 71% ^ |
| Tailored (Vintage 2031 - 2033) Plan | BlackRock | +8.3% | 59% |
^Equity % at 30 September 2024, asset allocation changes on a weekly basis due to the plan’s actively managed component.
Bonds in 2024 (as at Q3)
What are bonds?
Bonds are a type of investment where you lend money to an organisation, like a government (sovereign bonds) or company (corporate bonds). In return, they agree to pay you back with interest over a fixed and pre-agreed period of time, this is known as the coupon. A bond yield is the anticipated rate of annual return that an investor gets from a bond for its duration (maturity of the loan).
Bonds have different ratings, with AAA grade also known as “investment grade”, signifying the highest quality with minimal risk of default. Due to their historical stability and predictability, bonds are a popular choice for shorter-term investors such as retirees who plan to draw down in the near future. Bonds are also known as ‘fixed-income securities’ or debt.
Global bond markets
Interest rates can impact pensions, especially for savers nearing retirement. When interest rates rise, newly issued bonds provide better returns, which can help pension funds grow. On the other side, low interest rates can reduce returns.
In the US, a surprising drop in jobs and inflation led the Federal Reserve to cut rates by 0.5% in September. In the UK, the Bank of England began cutting interest rates in August - for the first time since the pandemic. This cycle of interest rate cuts has also been mirrored in other major economies, such as Canada and Europe.
| Fund | Source | Performance over 2024 (%) | Fixed-income proportion (%) |
|---|---|---|---|
| Schroder Long Dated Corporate Bond Fund | Morningstar | -0.5% | 86% |
Source: Morningstar
PensionBee’s fixed-income plans
| Plan | Money manager | Performance over 2024 (%) | Fixed-income proportion (%) |
|---|---|---|---|
| Pre-Annuity Plan | State Street Global Advisors | -1.9% | 100% |
| Tailored (LifePath Flexi) Plan | BlackRock | +6.2% | 72% |
| Tailored (Vintage 2025 - 2027) Plan | BlackRock | +6.9% | 41% |
PensionBee’s money market plans
| Plan | Money manager | Performance over 2024 (%) | Cash equivalent proportion (%) |
|---|---|---|---|
| Preserve Plan | State Street Global Advisors | +4.0% | 94% |
Have a question? Get in touch!
Do you want to know more about your pension plan with PensionBee? You can check out our Plans page to learn how your money is invested in different assets and locations, or log in to your BeeHive to see your specific plan. You can always send comments and questions to our team via engagement@pensionbee.com.
Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
