Abstract
The past year brought once again exceptional returns to U.S. large cap stocks while most bond classes and global stocks had a lackluster year. With an average post WWII annual return of +10.1%, the S&P 500 posted back-to-back years of outsized performance, up +23.3% in 2024 after rising +24.2% in 2023. By comparison, the U.S. aggregate bond index was up +1.3% (total return) and the MSCI All-Country ex-U.S. only gained +2.2%. The dual narrative of U.S. economic strength relative to the rest of the world (“U.S. exceptionalism”) and the artificial intelligence (AI) trade, centered on the U.S. mega cap technology stocks, has fueled investor optimism for large cap U.S. stocks.