Hello and welcome to the latest issue of Hub News. Markets appear to have recovered from their headless chicken panic at the start of the year, but investors have been left bruised by the experience. Markets have traded in a sideways pattern ever since, as investors have wrestled with various conflicting global forces and concluded that inactivity may be the best option in the short-term.
At Adviser Hub, we do not pretend to have the solutions to the complex environment in which we find ourselves. That would be a lofty claim indeed. However, in this issue of Hub News, we have tried to bring you a variety of views on how this environment may be navigated.
There is the problem of a changing rate environment. Although the US may have postponed any further rate rises, the direction of travel is clear particularly given the apparent stabilisation in commodity prices. This risks a shock to the bond market. With this in mind, M&G’s James Tomlins talks about how global floating rate high yield bonds can act as a ballast in a portfolio (p. 28-29). In the same spirit, AXA Investment Managers’ Nicolas Trindade discusses the role of short duration bonds (p.15).
The UK has been mired in Brexit versus Remain, which has held back asset prices and dampened sterling. While it may claw this back after the June vote, it should perhaps serve as a reminder of the merits of diversifying internationally. Henderson talks about its global equity income strategy (p17-18), while Aberdeen and HSBC consider the merits of multi-asset investment more generally (p37-38 & p.34-35). Baillie Gifford discusses its US strategy in more detail on pages 21 and 22.
Nevertheless, we recognise the UK will remain the core market for most of your clients and we have Invesco Perpetual’s John Greenwood discussing the UK market outlook in more detail (p13-14), and BlackRock talking about the health of the UK high street (p.7-8).
Finally, GSAM, J.P. Morgan Asset Management and Schroders consider how investors can equip themselves psychologically to deal with difficult markets, harnessing the lessons of behavioural finance, not following the herd and being optimistic rather than pessimistic.
We very much hope it gives you some tools to navigate these choppy waters.
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