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.
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.
Important information: This communication is marketing material. The views and opinions contained herein are those of the named author(s) on this page, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This document is intended to be for information purposes only and it 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. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroder Investment Management Ltd (Schroders) does not warrant its completeness or accuracy. The data has been sourced by Schroders and should be independently verified before further publication or use. No responsibility can be accepted for error of fact or opinion. This does not exclude or restrict any duty or liability that Schroders has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory system. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions. Past Performance is not a guide to future performance. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of any overseas investments to rise or fall. Any sectors, securities, regions or countries shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell. The forecasts included should not be relied upon, are not guaranteed and are provided only as at the date of issue. Our forecasts are based on our own assumptions which may change. Forecasts and assumptions may be affected by external economic or other factors. Issued by Schroder Unit Trusts Limited, 31 Gresham Street, London, EC2V 7QA. Registered Number 4191730 England. Authorised and regulated by the Financial Conduct Authority.