Victory Capital Holdings, Inc. Class A Common Stock · NASDAQ:VCTR
Victory Capital Holdings, Inc. Class A Common Stock — WestEnd Advisors — Q4 2024 Earnings Presentation
27 slides from Victory Capital Holdings, Inc. Class A Common Stock's earnings presentation, Oct 1, 2024
Slide 1: Macroeconomic Highlights Q4 2024
Macroeconomic Highlights Q4 2024 20241001-3905767
Slide 2: Table of Contents
Table of Contents WestEnd Outlook Highlights ………………………………………………………………………………………………… 2 U.S. Equity Sector Allocations ………………………………………………………………………………………………… 3 U.S. International and Fixed Income Allocations …………………………………………………………………………… 4 U.S. Economic & Market Backdrop Economic Cycle: Economy growing
Slide 3: WestEnd Outlook Highlights
WestEnd Outlook Highlights • We believe the global economy, and particularly the U.S., could maintain slow-to-moderate late-cycle growth into 2025, but elevated market sentiment amid signs of slowing economic conditions also warrant caution. While the Fed and other central banks have begun monetary
Slide 4: U.S. Equity Sector Allocations
U.S. Equity Sector Allocations WESTEND ETF STRATEGIES Current large-cap U.S. equity sector allocation and avoidance* Sector Sector Allocations Avoidance • Health Care • Energy • Consumer Staples • Industrials • Utilities • Materials • Information Technology • Communication Services • Consumer Discre
Slide 5: International Equity and Fixed Income Allocations
International Equity and Fixed Income Allocations WESTEND GLOBAL ETF STRATEGIES Current regional equity allocation positioning in global portfolios* Regional Equity Overweights Regional Equity Underweights • Japan/Developed Asia • Europe • Emerging Markets WESTEND BALANCED ETF STRATEGIES Current fix
Slide 6: U.S. Economic & Market Backdrop
U.S. Economic & Market Backdrop westendadvisors.com | info@westendadvisors.com | 888.500.9025 Macroeconomic Highlights Q4 2024 | 5 20241001-3905767
Slide 7: Economy Growing at Below-Trend Pace
Economy Growing at Below-Trend Pace BROAD ECONOMIC ACTIVITY INDICATORS 2.0 1 WestEnd Composite (Std. Deviations) Portfolio Impact: Fading economic tailwinds and 1.5 0.75 a return to below-trend economic growth CFNAI 6-Month Average 1.0 0.5 warrant an avoidance of highly cyclical 0.5 0.25 sectors lik
Slide 8: Soft Labor Demand Becoming More Apparent
Soft Labor Demand Becoming More Apparent PAYROLL SLOWDOWN HAS YET TO STABILIZE 800 MoM Net Payroll Gain (3M Average) 700 600 500 Portfolio Impact: Softening employment trends, which 400 300 200 have been percolating under the surface, have 100 0 become more visible in the labor market data. We -100
Slide 9: Consumer Spending is Robust, But There is a Limit
Consumer Spending is Robust, But There is a Limit FADING INCOME TAILWIND LIMITS FURTHER PCE ACCELERATION 7.0% 6.0% Portfolio Impact: Healthy income growth 5.0% has supported consumer spending over the past year, but is likely on a slowing trajectory, Year-Over-Year Growth 4.0% 3.0% in our view. With
Slide 10: Economy is Late-Cycle with Low Contagion Risk
Economy is Late-Cycle with Low Contagion Risk WEA LENGTH-OF-CYCLE INDICATOR 2.0 1.5 Standard Deviation (6-Month Average) Portfolio Impact: Ongoing risks to the economy in the U.S. 1.0 0.5 warrant an avoidance of highly cyclical sectors, in our 0.0 view. At the same time, the absence of extreme exces
Slide 11: Trade and Taxes Reign Supreme This Election Cycle
Trade and Taxes Reign Supreme This Election Cycle DEFICIT PROJECTED TO RISE IN EITHER ELECTION OUTCOME 4% 2% Portfolio Impact: Trade and Tax policy are key focus Budget Deficit (% of GDP) 0% -2% areas this election cycle, though we do not expect either -4% candidate to be able to fully implement the
Slide 12: Expect Earnings to Drive Returns in 2025
Expect Earnings to Drive Returns in 2025 CONTRIBUTORS TO S&P 500 TOTAL RETURN 50% 45% 40% Portfolio Impact: Our 2025 return outlook 35% 30% for the S&P 500 contemplates healthy 25% 22% 26% returns, albeit lower compared to 2023 and 20% 28% 15% 6% 26% 8% 11% 30% 8% YTD 2024. We believe sector dispers
Slide 13: U.S. Sector Outlook
U.S. Sector Outlook westendadvisors.com | info@westendadvisors.com | 888.500.9025 Macroeconomic Highlights Q4 2024 | 12 20241001-3905767
Slide 14: Sector Leadership Has Potential to Widen Out
Sector Leadership Has Potential to Widen Out NUMBER OF SECTORS OUTPERFORMING THE S&P 500 10 9 Portfolio Impact: We believe sector leadership is poised 8 to broaden out following a period of unusual narrowness, in 7 which a substantial overweight of mid-phase sectors Sector Count 6 5 would have been
Slide 15: Hottest Parts of Mid-Phase May Cool Off
Hottest Parts of Mid-Phase May Cool Off NOT JUST TECH MEGA CAPS THAT ARE EXPENSIVE 50% Relative Fwd P/E vs Corresponding S&P 500 Index 45% 40% 35% Portfolio Impact: The Information Technology sector 30% 25% has been a dominant driver of market fundamentals and 20% 15% returns over the past 18 months
Slide 16: Financials Sector's Outlook Better Than Perceived
Financials Sector’s Outlook Better Than Perceived INVESTMENT BANKING REBOUND OFFERS UNIQUE OPPORTUNITY 80% Portfolio Impact: We have increased exposure to the Year-Over-Year Growth in IB Fees* 60% Financials sector in our U.S. large-cap allocations, as 40% C onsensus Federal Reserve flexibility and
Slide 17: Opportunities Budding in Real Estate
Opportunities Budding in Real Estate REIT VALUATIONS AND INTEREST RATES 26 6% Portfolio Impact: The combination of slowing Price to Funds From Ops. (P/FFO) 24 5% 22 economic growth and disinflation year-to-date has 4% 20 aligned with downward pressure on interest rates, 18 3% and the Fed has now beg
Slide 18: Positioned for Improving Late-Phase Fundamentals
Positioned for Improving Late-Phase Fundamentals CONSUMER STAPLES VOLUMES CONTINUE TO RECOVER 10.0% Real PCE Year-Over-Year (%) 9.0% 6-Month 8.0% 7.0% Annualized Growth Portfolio Impact: We believe exposures to the 6.0% 5.0% Consumer Staples and Health Care sectors 4.0% 3.0% provide attractive defen
Slide 19: Commodity-Linked Sectors Remain Challenged
Commodity-Linked Sectors Remain Challenged COMMODITY PRICES DRIVE FUNDAMENTALS 60% Portfolio Impact: Fundamentals for sectors Year-Over-Year Growth 40% such as Materials and Energy are significantly impacted by the direction of 20% commodity prices. Commodity price 0% deflation has driven below-mark
Slide 20: International Economic & Market Backdrop
International Economic & Market Backdrop westendadvisors.com | info@westendadvisors.com | 888.500.9025 Macroeconomic Highlights Q4 2024 | 19 20241001-3905767
Slide 21: Global Growth Challenged as Easing Cycle Arrives
Global Growth Challenged as Easing Cycle Arrives GLOBAL NOMINAL GROWTH CONTINUES TO SLOW 3.0 2.0 Portfolio Impact: Most major economies are slowing Standardized Nominal GDP YoY and face late-cycle challenges. We do not expect rate 1.0 cuts to provide an immediate lift to growth, and we 0.0 believe a
Slide 22: Wealth Trends Diverging in Asia
Wealth Trends Diverging in Asia WAGE GROWTH IN JAPAN HIGHEST IN OVER 30 YEARS 6.0 Year-Over-Year Growth (%) 5.0 4.0 Portfolio Impact: We continue to overweight Japan, which 3.0 is benefitting from stimulative policy and a step-up in 2.0 nominal income growth. It also has the potential to perform 1.0
Slide 23: Interest Rates & Real Assets
Interest Rates & Real Assets westendadvisors.com | info@westendadvisors.com | 888.500.9025 Macroeconomic Highlights Q4 2024 | 22 20241001-3905767
Slide 24: Corporate Credit Not Out of The Woods Yet
Corporate Credit Not Out of The Woods Yet INTEREST COSTS HAVE YET TO REFLECT FED TIGHTENING 5 2.0% 2Y Change in Net Interest Payments 4 Portfolio Impact: Higher interest 1.5% costs associated with debt 2Y Change in 2Y Yield (%) 3 1.0% 2 maturities have the potential to 1 0.5% weigh on corporate cred
Slide 25: Higher Bond Yields Provide Portfolio Cushion
Higher Bond Yields Provide Portfolio Cushion LONG-END PRICING A RETURN TO NEUTRAL 7.0 Rates are restrictive 6.0 Portfolio Impact: Interest rates are consistent with a return 5.0 to a neutral monetary policy stance, but attractive yields and 4.0 Yield (%) the potential for fixed income to protect aga
Slide 26: Asset Class Returns Driven by Macro Environment
Asset Class Returns Driven by Macro Environment MACRO CONDITIONS DRIVE ASSET CLASS DISPERSION 17.5% Portfolio Impact: Moving forward, we Average Monthly Return (Annualized)* 15.0% 12.5% see a growing likelihood that inflation 10.0% pressures continue to fade as the risk of 7.5% recession rises. As s
Slide 27: Footnotes & Disclosures
Footnotes & Disclosures WestEnd Advisors, LLC (“WestEnd”), an SEC-registered investment adviser, operates as an autonomous Victory Capital® Investment Franchise. WestEnd’s active principals are responsible for managing the firm and its day-to-day operations. Registration of an investment adviser doe