Deputy Head of Multi-Asset
Performance over the quarter to March has felt like two worlds, with equity performance acting like there is a bright future approaching, while bond performance paints a darker picture. There are many ways the future can play out, so we remain cautious.
Videos: Fund Manager Q&A’s
Simon Doyle and Simon Stevenson discuss how valuations, cyclical influences and liquidity all form part of the investment considerations, and how the portfolio is managed to prepare for risks. Its lack of rigidity is what allows it to move to protect capital, which is key if an investor can’t sustain an elongated slump in growth assets. When you’re investing money for customers’ retirements, protection is important.
President Trump is nothing if not true to his election promises. With mid-terms looming, he’s focusing on getting voters to show up. This means his trade wars will likely continue, and something will have to give to get him back to the negotiating table.
Currently, markets expect a modest lift in inflation and with cash rates rising, this raises questions around whether the expansion will soon stall.
We believe that the market generally discounts the true value of cash. Cash has several very useful characteristics that make it valuable in portfolio construction.
The last year has seen a major sea change in views around the outlook for inflation. We were not surprised by this sea change as it was driven by the impact of the volatility of oil prices on global inflation, and the market participants’ tendency to extrapolate the recent inflation experience.
History tells us that periods of crisis are often preceded by periods of abnormally low volatility and complacency about risk and valuations. Are we in one such period?