60 seconds with Johanna Kyrklund on investing in volatile markets
Johanna Kyrklund, Head of Multi-Asset Investments, comments on why recent market volatility could present an opportunity to investors who take a flexible, active investment approach.
14 September 2015
China dominates market sentiment
China has dominated headlines this summer, first of all with the correction in its stockmarket in July and then more recently with the decision to adjust its currency in August.
But why has China caused such widespread volatility across financial markets around the world?
The issue is broader than just China – the problem is that the financial crisis of 2008 has cast a long shadow and as a consequence the economic recovery of recent years has been more anaemic than investors were expecting.
The decision by China to adjust its currency is symptomatic of a world where global demand is weak and therefore currency movements can have a disproportionate impact on the fortunes of any given economy.
Investors need to be flexible
We expect this to continue. We are in an environment where global growth is slow and as a consequence investors, periodically, will be concerned that the recovery could stall.
However, interest rates will remain low. Even in the US where the Federal Reserve is planning on raising interest rates we expect the rate hiking cycle to be quite shallow.
With these low interest rates asset class valuations will remain supported. Also we see value in some of the more cyclical assets such as emerging markets, which should provide opportunities for a more flexible and active investment approach.
- Johanna Kyrklund
- Monetary Policy
Important Information: The views and opinions contained herein are those of Schroders’ Investment team, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results. The value of an investment can go down as well as up and is not guaranteed. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Some information quoted was obtained from external sources we consider to be reliable. No responsibility can be accepted for errors of fact obtained from third parties, and this data may change with market conditions. This does not exclude any duty or liability that Schroders has to its customers under any regulatory system. Regions/ sectors shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. The opinions in this material include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change. UK: Schroder Investment Management Limited, 31 Gresham Street, London, EC2V 7QA, is authorised and regulated by the Financial Conduct Authority. For your security, communications may be taped or monitored. Further information about Schroders can be found at www.schroders.com US: Schroder Investment Management North America Inc. is an indirect wholly owned subsidiary of Schroders plc, a SEC registered investment adviser and is registered in Canada in the capacity of Portfolio Manager with the Securities Commission in Alberta, British Columbia, Manitoba, Nova Scotia, Ontario, Quebec and Saskatchewan providing asset management products and services to clients in Canada. 875 Third Avenue, New York, NY, 10022, (212) 641-3800. www.schroders.com/us