US markets bounced back from a poor month in May to hit record levels in June. Donald Trump tweeted that trade talks between the US and China were set to resume after a productive meeting between the two countries at the G20. There was also an announcement that no additional trade levies would be implemented before the next round of talks. This, along with the likelihood of US interest rate cuts, boosted the global economy.
Global markets have had an extremely strong 6 months to begin 2019. The main drivers have been the Tech stocks the majority of us have probably used at some point this year – Facebook, Amazon, Netflix and Google. As we move towards a society where people care more about the environmental impact of their investments, these types of stocks are becoming more popular than old favourites like BP and Shell.
Boris does Brexit
At the time of writing, it has just been announced that Boris Johnson has won the Conservative leadership race and is therefore the UK’s new Prime Minister. The only thing this guarantees in terms of Brexit is further uncertainty. It’s unclear at this point how this will affect future negotiations with the EU, they’ve intimated that they’re unwilling to come back to the table but this could change with Johnson’s threat of being willing to walk away without a deal. This could lead to another General Election as we wouldn’t expect either the current deal or No Deal to be ratified by Parliament.
The market is predicting a low level of growth, but we do believe there are some reasons for positivity. We continue to be supportive of stocks but remain mindful of the potential risks in the current market. The main risks still come from Brexit uncertainty in the UK and the potential of trade talks between the US and China collapsing completely. We also believe the US Federal Reserve will cut interest rates at least once between now and the end of the year which should benefit Global markets.
Investing with us
Our key goal is to deliver good outcomes for our customers. We do this by following our core beliefs:
• Pensions are long term investments
While it can be hard to watch large market drops, especially if the value of your savings is falling, it’s important to remember that investing for retirement is a long term game. It’s very normal for an economy to go through phases of expansion and contraction.
In fact, over the long run there is a recession every five to ten years. We think of these cycles in terms of waves of growth and inflation, and consider which investments do best when growth is strong or weak, and when inflation is falling or rising. Our investment experts analyse and understand where we are in that cycle and which types of investments we should be investing in within the portfolio mix. This is called the short term view and we do this on a day to day basis so that we can try to maximise returns and avoid some of the losses.
Falling markets can be buying opportunities, particularly when you are planning to invest for a long time period. We see the current market falls as potential buying opportunities for equities. The multi asset portfolios are currently holding slightly more equities than average, having bought on the recent dips. We’re also holding more corporate and high yield bonds.