During periods of market sell-offs, the natural human reaction is to contract our investment time horizons and focus on short-term negative noise. It’s at just such times, when our instincts may lead us in the wrong direction, that a well-established investment process can help to avoid behavioural pitfalls. Such a process might usefully include:
The past few months have seen darkening economic skies, reflected in some less than pleasant equity market returns. In the first six months of this year the MSCI AC World Index fell 10.86% in sterling terms, while the FTSE All Share fell 4.4%. It is at moments like this that investors need to focus on long-term thematic drivers of growth, along with disciplines around balance sheet leverage and valuation, to help ensure their portfolios have suitably resilient characteristics.
As real incomes are squeezed and social unrest builds, the areas of strongest spend are likely to be those which are essential to social stability:
All data from Bloomberg unless otherwise stated.
For professional investors only. This is a marketing communication. Information on the rights of investors can be found here. The investment promoted concerns the acquisition of shares in a fund and not the underlying assets. Past performance is no guarantee of future performance. The value of an investment and the income from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested. Investments include shares in small-cap companies and these tend to be traded less frequently and in lower volumes than larger companies making them potentially less liquid and more volatile. The information contained herein including any expression of opinion is for information purposes only and is given on the understanding that it is not a recommendation.
From compressing the price side of the P/E equation, investors are increasingly fretting over earnings, marking down any company that hints of cyclicality.Read More 14 July 2022
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