IN FOCUS6-8 min read
Schroders Equity Lens April 2025: your go-to guide to global equity markets
Looking through the tariff turmoil in global equity markets.
Lees volledig rapportSchroders Equity Lens - April 2025
63 Pagina's
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The April 2025 edition of the Schroders Equity Lens is now available: Schroders Equity Lens
Summary:
Don’t be spooked by volatility:
- The stock market has fallen back sharply. But this is normal market behaviour. 10%+ falls happen in more years than not. 20% falls happen once every four years, on average (slides 6-7).
- Equities are volatile but have a much better track record of beating inflation than cash (slides 8-9). Historically, being spooked by spikes in volatility would have been detrimental to long-term wealth (slide 10-11).
- There is always a reason to worry but, in the long-run, stocks have beaten bonds which have beaten cash (slide 12).
- Diversified portfolios have fared better: bonds are back to acting as a diversifier. If it’s a growth shock (like this), bonds can help manage that risk. If it’s an inflation shock (like post-Covid) they can’t. Risk management is about trying to be robust to a range of outcomes in the face of uncertainty. Bonds clearly have value for equity investors from that perspective (slide 13).
Is this a buying opportunity?
- Valuations have fallen back sharply, into “cheap” territory vs history. Even the US, so long an expensive outlier, is fast converging on more neutral valuations vs history.
- There are more unknowns than usual, given the policy uncertainty and President Trump’s use of tariffs as a negotiating tool. But, for long-term investors with cash on the sidelines, opportunities are emerging. A policy U-turn could see a rapid recovery in markets.
Performance leadership has flipped and performance has become more differentiated:
- the global market is heavily concentrated in the US and the Magnificent-7 (slides 50-52) but these have been among the worst performers recently:
- almost every country in MSCI ACWI outperformed the US over the past three months (slide 17).
- over 90% of companies in MSCI ACWI outperformed the Magnificent-7 over the past three months (slide 18).
- in the run up to 31 March, correlations between countries, sectors and stocks have all fallen (slides 19-21).
Chart of the month:
Lees volledig rapportSchroders Equity Lens - April 2025
63 Pagina's
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