Our Views on the Markets and the Economy
Articles, investment updates and economic analysis
As we approach the half-way stage in the year it’s perhaps timely to review what’s happened in investment markets recently, and to look at the topics portfolios will need to address in the months ahead.
Not since the great financial crisis (GFC) of 2007-2008 has so much focus globally been on the stability of banks and their ability to repay depositors and investors. Our chief investment officer, Iain Barnes, answers some of the questions investors may have about the current situation and what it could mean for investment portfolios.
While 2022 was undeniably challenging, there are many opportunities this year and beyond if investors are prepared to be patient and discerning. A few themes and topics stand out as being potential key drivers of returns in 2023.
Rarely do events in financial markets lead the main evening news. This highlights the magnitude of UK bond market volatility and sterling’s fall in the past few days, and underscores how important it is for investors to be aware of the consequences and to be prepared.
The inclination to be more responsible is changing how many consumers are choosing to live their lives, and also how they invest. People want more of a say in how our society is shaped and where their money is directed as they prepare for their future. We now offer investors more choices to help them decide what works best for them.
How much longer should investors be misguided by advocates of the active fund management industry? Yet again, the latest research reveals that active fund managers are not justifying their high costs. For most investors, the numbers just don’t add up.
It has been a very difficult first half of the year for most investment markets (some worse than others), with the US S&P 500 Index down 17% and the tech heavy Nasdaq Index down more than 25% in US dollar terms. Stocks in Europe have also fallen sharply, and to a lesser extent, in Asia. Only the energy and resources-laden FTSE 100 has offered resistance, with returns close to 0%, albeit in sterling terms.
There has been much commentary recently about falling bond prices, especially around coverage of US Treasury bonds. But what does this mean for investors who hold bonds and even for those who are not invested in this asset class?
Russia’s invasion of Ukraine overshadowed all other issues during the quarter. Indicators of market volatility, which were already elevated, snapped higher as investors assessed the tragic humanitarian consequences as well as the wider economic implications for the European and global political order.
The conflict in Ukraine, global inflation and the attempts to control it are primary causes of worry now. But it’s unusual to have a period when there are no concerns whatsoever, so investors should plan for multiple scenarios and try to prepare portfolios which are resilient.
Team Contributors
Gerard Lyons
Charlotte Ransom
Thomas Salter
Iain Barnes
Simon McConnell
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