Dear fellow investors,
2024 proved to be a promising year for our Spaceship Voyager portfolios, fueled by US interest rate cuts, ongoing AI investments, and the “Trump Bump” which supercharged year end market returns.
Now that we’ve closed out an eventful 2024, it’s time to take a moment to share our perspectives and outlook on the year that passed, and look ahead to the coming year, including its opportunities and challenges.
The impact of the US election
US elections can have a big impact on the stockmarket, and we saw that happen in 2024.
When the United States elected President Trump in early November, it ignited renewed market optimism and enthusiasm.
This is because Trump is perceived to have a pro-business stance that’s expected to lead to deregulation and a reduction in anti-trust enforcement, which would lead to increased power of individual companies.
This perception had a particularly strong impact on some of the stocks we invest in through the Spaceship Voyager portfolios, including Tesla and Palantir.
It was especially notable for investors when Trump was named Time magazine's Person of the Year and rang the New York Stock Exchange opening bell.
Looking ahead to this year, we anticipate that AI will continue to be a major market driver.
In fact, Taiwan Semiconductor, the foundry responsible for producing the majority of cutting-edge semiconductors, has just projected a 40% annual growth in AI accelerators over the next five years from a high 2024 base.
That said, we also anticipate increased volatility as reality begins to set in. Risks such as inflation, trade wars, and the prospect of "higher-for-longer" interest rates may come into sharper focus, potentially weighing on the market.
Market corrections are normal
Before we delve into the details of what has been a strong year, it would be remiss of us not to state that market corrections of around 14.1% are normal.
Source: JP Morgan
Investors should anticipate a market correction every year. A market correction is when a stock, index, or sector falls between 10% and 20% of its most recent peak.
While these corrections can be unnerving, we believe long-term investors should avoid trying to time the market, particularly given the tax implications and the risk of missing out on sustained growth.
This is why dollar-cost averaging (DCA), which is when you invest smaller, consistent amounts regularly, can be a helpful strategy for some investors. This approach can reduce emotional decision-making and allow you to buy at lower prices during downturns, which can work in your favour when prices recover.
When the going gets tough it can help to remember that even with an average intra-year decline of 14.2%, the S&P 500 has posted positive annual returns in 34 out of the last 45 years.
Smaller stocks and fintechs could have their moment
The “Magnificent Seven” (Mag 7), which includes Apple, Amazon, Microsoft, Nvidia, Google, Meta, and Tesla, have been the primary drivers of market performance over the past few years, once again outpacing broader indices.
While their long-term outlook remains strong, relative to the rest of the market, analysts are projecting their growth rate to map more closely to the broader market.
In Q4 2024, the Mag 7 were expected to grow at 20%, compared to 17% for the rest of the market (4Q 25), signalling that the growth gap is narrowing (see chart below).
Source: JP Morgan
This could lead to a pause in the performance of these mega-caps, while smaller, more attractively priced stocks with similar growth potential may begin to draw greater investor interest.
The Spaceship Universe Portfolio has a target weighting of 16.5% in the Mag 7, which means that around 16.5% of the portfolio is invested in those stocks.
Thankfully, the Where the World is Going (WWG) portfolios have significant exposure outside of the Magnificent Seven. 83.5% of the Spaceship Universe Portfolio is invested in other themes, where we believe there is significant upside.
While this segment has lagged recently, it has seen some recovery post-Trump’s election. Smaller companies are typically more sensitive to economic shifts, such as declining interest rates and M&A activity — factors that have been muted under the last US administration.
It's a surprising statistic, considering both the Spaceship Universe and Spaceship Earth portfolios have reached new unit price highs, that the average global Spaceship Universe Portfolio stock is down about 33% from its peak at the time of writing.
For instance, Disney is down 44%, and Nike is down 56%. AI and technology stocks have led market returns, while many other sectors have been left behind.
Looking ahead, we are particularly optimistic about the fintech sector where we maintain a large exposure with stocks such as Block.
Deregulation, lower interest rates, and a resilient consumer point to continued positive momentum.
Investing in other economies: A look at China
As trend investors, we remain focused on the big picture: AI, cloud computing, fintech, and the ageing population.
However, an interesting macro trend has emerged with China’s post-COVID recovery failing to materialise as expected.
Given China's high debt levels and aging demographics, the last thing investors wanted to see was deflation — falling prices, which can dampen consumer confidence — taking hold in the market.
Deflation, while initially appealing, can lead to postponed purchases and deeper economic stagnation.
In fact, bond markets are now pricing China’s long-term interest rates lower than Japan’s—signaling long-term expectations for low growth and inflation.
Source: FT
This convergence of interest rates has implications for global markets, particularly in relation to Australia, and helps explain why banks have outperformed compared to resource majors like BHP.
For China’s outlook to improve, domestic consumption must increase, which seems unlikely under the current manufacturing-led economic model.
However, we are mindful of potential opportunities arising from trade volatility and the export of deflation.
Our personal reflection
Despite a strong year, we missed opportunities in the Industrials and Utilities sector, which performed exceptionally well due to the surge in demand for infrastructure and power (driven by AI and data centers).
While we have significant exposure to AI, the increased demand for energy is a trend we could have capitalised on.
Looking ahead: Investing in Where the World is Going (WWG) for 2025
As we look to 2025, our investment philosophy remains focused on "Investing in Where the World is Going" (WWG). This approach focuses on companies with strong growth potential, driven by enduring trends, and a competitive advantage (or “moat”) that allows them to maintain that value over time.
- The Trend: A company’s ability to create long-term value through emerging trends, such as AI.
- The Moat: A company’s ability to protect its market position through competitive advantages like branding, scale, and network effects.
(Check out our Spaceship Voyager reference guide for more about the WWG process.)
In contrast to 2022, when COVID-driven trends such as e-commerce and software outperformed temporarily, we believe today’s driving force—AI—is a more lasting and foundational shift.
Unlike COVID, which was a short-term positive for the likes of ecommerce, AI is a long-term revolution similar to previous technological shifts like PCs, mobile, and cloud computing.
The opportunities in AI extend beyond just generative models to include advancements in parallel computing and recommender systems impacting advertising and social media newsfeeds.
There is also potential in agentic AI, with AI not answering questions but automating actions on our behalf, which should provide a boost to software stocks and data platforms, all of which should continue to drive performance for years to come.
The bottom line
In 2024, the Spaceship Voyager portfolio investors saw stellar returns for the calendar year.
The Spaceship Universe Portfolio returned 43.87% in the year ending 31 December 2024. It has returned an annualised performance of 15.28% pa since the Funded Date* of 15 May 2018 (79 months).
The Spaceship Earth Portfolio returned 34.79% in the year ending 31 December 2024. It has returned an annualised performance of 11.33% pa since the Funded Date* of 12 November 2020 (49 months).
The Spaceship Origin Portfolio returned 23.51% in the year ending 31 December 2024. It has returned an annualised performance of 10.49% pa since the Funded Date* of 15 May 2018 (79 months).
For the Spaceship Galaxy and Spaceship Explorer portfolios, investment performance data will be available after one full year of history. They were funded on 30 April 2024.
Past performance is not a reliable indicator of future performance and is provided for your information purposes only. Returns are net fees, and not a projection.
The Funded Date represents the date on which the fund was substantially invested in accordance with its investment strategy.
Thank you for your trust and partnership
Thank you for your continued trust and partnership.
We are excited to work with you throughout 2025 and beyond.
Some of the Spaceship Voyager portfolios invest in Tesla, Palantir, Block, Disney, and Nike at the time of writing.
Important! We’re sharing with you our thoughts on the companies in which Spaceship Voyager invests for your informational purposes only. We think it’s important (and interesting!) to let you know what’s happening with Spaceship Voyager’s investments. However, we are not making recommendations to buy or sell holdings in a specific company. Past performance isn’t a reliable indicator or guarantee of future performance.
