The year 2023 began with a challenging outlook, as markets reflected concerns about inflation and anticipated a possible recession in the second half of the year. However, last year turned out to be considerably more positive than expected for those involved in traditional financial asset markets. In a complex global context, marked by the rapid tightening of monetary policy, the world’s major stock markets have managed to post gains. This performance is mainly attributed to two key factors: global GDP growth, despite tight monetary policies; and strong global corporate earnings, led by the “Magnificent 7”.
The US economy surprised in 2023 by outperforming expectations, supported mainly by growth in US household spending, driven by high levels of savings, a low unemployment rate and solid (although slowing) wage growth. On the other hand, the European economy experienced a broad-based slowdown, with a 0.3% contraction in the German economy playing a significant role in the Eurozone’s weak growth in the second half of the year. Factors such as a decline in industrial production, a slower recovery in China and high energy costs for European manufacturers contributed to the slowdown. In addition, limited expansion in European household spending, due to weak real incomes, accentuated the disparity with levels seen in the United States.
On the market performance front, both public and private institutions have modestly adjusted growth projections upwards, supported by better-than-expected activity data and downward trending inflation. These elements have contributed to restoring confidence in financial markets in a challenging environment.
Given the circumstances, the Caixa 2 F.P. Pensions Fund obtained a positive return of +8.8% over the year. In addition, it should be noted that the Fund also managed to beat both its investment target (3-month Euribor + 3.5% annualised over 5 years) and the CPI. Specifically, the Fund obtained a 5-year annualised return of 5.8% at the end of 2023, while the investment objective was 4.0% and the CPI 3.0% on a homogeneous basis.
A more detailed analysis of the different assets that form part of the portfolio of Pensions Caixa 2, F.P., highlights the positive attribution of the equity category, although the fixed income, alternative credit and reinsurance categories also added to the Fund’s final return. However, unlike the previous year, the allocation to private markets did not exhibit strong positive results due to the ongoing valuation mismatch in this category, which has meant that part of the negative trend of the year 2022 is still present.
Finally, in comparison with the market for Employment Tax Qualified Pension Funds, the Fund ranks among the top 5% of the best funds in Spain at years 5 and 10 and among the top 25% of the best funds at years 1 and 3.
In short, Pensions Caixa 2, F.P. emerges as a highly attractive investment option for its participants, its performance exceeds targets, and its profitability stands out in the market.