What do the last few months of the year have in store for investors? 2017 has so far been interesting, to say the least. We have all become much better at expecting the unexpected; experience has certainly taught us that.
Many investors are getting used to a variety of political, financial and economic factors and hopefully learning to look through the ‘noise’ to focus on what really matters. What we do know is that market volatility will continue and areas of value exist, which makes asset allocation a key tool when planning your portfolio.
A healthy investor appetite
Investors started the year confidently as the ‘Trump reflation rally’ continued from the tail end of 2016. Although fading a little more recently, global equity markets hit all-time highs in the summer with over $10 trillion added to their value in the first half of the year, exemplifying a healthy investor appetite. Based on measures of volatility, investors’ tolerance for risk across many different asset classes was at a three year high in the summer.
With a backdrop of modest global growth at home, there are mixed signals of growth for the UK economy. We, of course, have the added complication of ongoing Brexit negotiations to contend with. Weak sterling remained the key driver of UK blue chip companies with high overseas earnings, nudging the FTSE100 higher. The FTSE250 has experienced more modest growth; its domestic focus benefitting less from the uplift of weaker sterling. The weaker currency has particularly benefitted those industries which export goods and services. Despite inflation remaining above target, many economists do not expect UK interest rates to rise until 2019.
What really matters?
As traditional macro concerns return to the fore, portfolio diversity holds the key to approaching your investments and managing risk. Having different assets in your portfolio from different sectors and global regions is helpful in achieving this. It is important to think about longer-term timescales instead of focusing too intently on short-term events and market fluctuations. What is clear is that financial advice is essential to help position your portfolio in line with your objectives and attitude to risk. Remember to get in touch if you have any changes in your personal circumstances which may affect your objectives, risk and capacity for loss.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.
The information within the article is for information purposes only and is purely market commentary and does not constitute individual advice.