Having been seemingly universally shunned by global investors, monies flowed back into the UK stockmarket in April. UK shares rose to the top of the leaderboard of major developed stockmarket indices, posting a return in excess of 6%, more than double the MSCI World index. This was pleasing to see as we had recently reduced overseas exposure to increase allocation to the UK stockmarket.
It was also pleasing to see that from a style perspective ‘Value’ showed outperformance whilst expensive ‘Quality’ areas of global stockmarkets lagged. It is our view that many leading defensive quality stocks are trading on demanding valuations and that there is more scope for shrewd stock-pickers to hunt for value in unloved, cheaper stocks.
Although global stockmarkets broadly moved back to positive territory, the elevated level of volatility of the first quarter persisted through much of April. After exceptional low levels of volatility in 2017 it is realistic to expect volatility to be more in line with longer-term levels going forward. Geopolitical headlines continued to play a significant role in unsettling investors, particularly the prospect of a “trade war” between the US and China alongside an escalation of tensions between the US and Russia over the situation in Syria.