Understanding the Recent Market Sell-off

Not widely welcomed, but arguably overdue?

The sharp sell-off in stocks that started last week and gathered steam this week lacked a specific trigger — unlike the last time US shares fell this much, which came in the wake of the US losing its AAA sovereign rating at S&P Global Ratings in 2011.

As with plane crashes, the experts are pointing to a confluence of factors, from concerns over the path of Federal Reserve interest-rate increases to a rapid unwinding of trades predicated on continued low volatility in markets.

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Investor Confidence Is High – Why Are We Surprised?

ftse100-14-feb-2017Survey data out of both the US and UK in recent months has confounded perceived wisdom
because despite significant political upheaval in these countries last year, confidence has improved.

This is something of a surprise because such substantial changes may be considered a destabilisation risk given the relative fragility of confidence following the global financial crisis.  Indeed, only twelve months ago the market would seemingly fall regardless of news flow as a combination of weak resource prices, concerns over China and now long forgotten whispers about the end of the credit cycle provided a negative background that was difficult to overlook.

To paraphrase Charles Mackay, author of Extraordinary Popular Delusions and the Madness of Crowds (first published in 1841) market participants were gripped by fear and in that condition investors saw risk even in enticing opportunities.

James Klempster (CFA), Head of Portfolio Management for Momentum Global Investment Management shares his view. Click here to view.

PortfolioMetrix Market Review and 2017 Outlook

A large computerised display of the Brit2016 was a year dominated by political upsets and upheavals but, despite the shocks experienced – fears of Chinese debt implosion, Brexit, Trump, various terrorist attacks, Leicester City winning the Premier League – it was an extremely strong year for markets overall. In fact, one of those years that beautifully illustrates the value of ‘time in the markets’, as opposed to ‘timing the markets’.
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PortfolioMetrix November Market Update

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The big news of the month was the election of Donald Trump as 45th president of the United States of America which world equity markets ultimately responded well to when viewed in local currencies. Bonds, however, generally fell in price as whilst Trump’s spending plans are likely to spur short to medium term growth they look likely to radically increase the fiscal deficit and push up inflation. For UK investors, after a tough post EU referendum period, the pound strengthened strongly in November which put pressure on the returns of overseas assets when converted back to sterling. Learn more

PortfolioMetrix Market Update

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September was again dominated by will-they/won’t they speculation around the US Federal Reserve raising rates at their meeting during the month, although fears over Deutsche Bank’s viability and an OPEC agreed production cut were also significant events.

Meanwhile, PortfolioMetrix’s model portfolios’ relative performance was again strong over the month, with the 10 balanced funds they regularly track up on average 0.3% over the month with the highest performing up 1.0% and the weakest down 0.5%.

Overall, Core Active 6 outperformed 9 of these 10 competitors.

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PortfolioMetrix: August Performance Update

Screen Shot 2016-06-21 at 13.39.15 August Overview
After an eventful few months in the UK, August was relatively quiet from a market point of view, with a large portion of Europe on holiday. For those left at their desks, the outlook for US interest rates and to a lesser extent a recovering (and then slightly fading) oil price seemed to drive most activity.

Quiet months are often good ones from a portfolio perspective, and so it proved this month too. The latest performance analytics pdf is available here and August commentary is available below. Learn more

Weekly Market Update

News this past week

  • Poor week for developed market equities
  • European government bond yields at record lows
  • Sterling volatility peaks
  • Mixed Eurozone production data
  • Chinese trade surplus increases once more

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