Investment markets have become more volatile in the last few months as worries in the UK around Brexit, and the wider concerns for world growth prospects come to the fore.
Over the last nine years since the “credit crunch” equity markets have largely been moving in a positive direction and investors have benefitted from very good returns despite some economic and political issues during this time. Markets have only recently started to focus on concerns which have been around for a while, and it is fair to say that there is little short-term optimism. This is not surprising with uncertainties over Brexit, the US and China trade-war, a forecast slow-down in economic growth and questionable government policies around the globe. We anticipate 2019 will continue to be a more volatile year than investors have become used to.
As you know our approach has always been to assess your level of risk and then to match that with an appropriate investment solution using a wide and diverse spread of different asset classes, which aim to deliver a positive return over the longer term. Clearly, we cannot predict the short-term future and therefore our solutions are not aimed at positioning your portfolio for a particular outcome or to try and be clever by timing markets or excessively tinkering with asset allocations. This strategy has worked well as shown in the chart below where we compare the five-year (to 31st December 2018) performance of the strategic asset allocation of a strategy 5 risk approach (blue) with the FTSE All-Share (red), the Balanced Growth Private Client Index, which is the benchmark for this level of risk (green) and a 90-day notice cash deposit account (purple):
Please note that the Strategic asset allocation data above does not represent your actual investment portfolio performance but is simply performance data based around the performance of the asset classes and does not take account of the performance of actual funds.
Obviously past performance is not a guide to the future, however looking back we are re-assured that our approach has been doing its job in protecting downside risk. For the longer-term investor, the ups and downs are part and parcel of investing as shown in the table below where the different annual calendar growth rates are compared from 2014 to 2018:
|Strategy 5 Strategic Asset Allocation
Ultimately losses are only realised if investments are actually sold. If your objectives have changed or you need access to your investments in a shorter period of time please do call us.