Whitechurch Asset Views - November 2018
Investors had a rude awakening in October after a prolonged period of relative calm. Markets went into freefall with a sharp sell-off in global equity markets, resulting in the worst month of performance since May 2012.
Best & worst fund performance
Whilst the sell-off was largely indiscriminate, IA China and Greater China suffered the heaviest falls (-11.0%) as investors became increasingly concerned over a broader slowdown in China, partly due to the increase in trade tensions with the US.
Volatility spikes across the globe
Stockmarket volatility saw a significant increase in October. The “Fear gauge” VIX index started the month at below 12 and spiked at 25 during the sharp sell-off in the middle before finishing the month at around 21.
UK blue chips prove relatively resilient
Whilst the UK markets fell back in what was a universal sell off, the UK stockmarket fall of just over 5% meant it was the most resilient of the leading global markets.
Currency diversification dragged on performance
Holding a basket of currencies proved positive for UK investors during a risk-off environment in October.
A month of two halves for bond investors
Bonds saw a sell-off early in the month as investors grew increasingly concerned over higher global interest rates, before recovering later in the month as they returned to favour as a safe haven in turbulent markets.
The best of the rest
Commercial property proved a resilient alternative to equity and bonds and is proving a good bedrock within our cautious and balanced portfolios.
We do not try to second guess short-term market movements, although less demanding valuations following the market falls do provide more opportunities for those who can invest without being fixated on short-term market fluctuations.