Markets continued their rally in Q1 2024, clocking in +10.6% for the S&P 500 and 9.0% for MSCI World. Our guiding principle of scarcity of growth has played well with areas like obesity, US construction materials, semiconductor equipment monopolies for AI, aerospace helping all Tema funds outperform their benchmarks. Life sciences overall continued their recovery, and we became increasingly confident in our differentiated approach, laid out in our latest white paper on the space.
Unlike Q4 2023, the backdrop was one of a move upwards in the policy rate forward curve – suggesting that what matters for equities is that the peak in rates is in. In fact – quality, a key tenant of Tena’s investment process tends to do best in the years that follow peak rates.
2024 is also an election year. What does it mean for markets? The short answer is not much for the overall market, but there is likely to be further cross currents under the surface. Areas like reshoring are likely to see continued support while healthcare could come under scrutiny if there is a democratic sweep. You can read how to position for it here.
During this period we launched the third fund in our healthcare suite managed by Dr. David K. Song, MD, PhD, CFA, the Tema Neuroscience and Mental Health ETF (MNTL). New estimates suggest 43% of the world’s population suffer from conditions affecting the nervous system – from Alzheimer’s to depression – and these represent one of the highest and, sadly, fastest growing disease burdens. Encouragingly there are many breakthroughs happening, creating one of the fastest growing and diverse segments of healthcare. This is the final frontier of modern biopharma and medical technology.