It has been a turbulent week, the most turbulent since the spring, although it is difficult to pin the recent decline in share prices on just one issue. Brexit (at least for the UK and Europe), trade wars, withdrawing of quantitative easing, higher interest rates and geopolitical tensions were all blamed as being at least partly responsible for the mayhem of the last few days.
For nearly all of 2018 we have been using call options (the right to buy an asset at a pre-determined price) in our multi-asset funds as a means of taking exposure whilst protecting the downside in any market rout. As these calls were in place last weekend, the past few days have been a tester as to how well this strategy has worked.
The MSCI World index which represents shares in all the major global markets, declined -5.136% from 5th October 2018 to 11th October 2018 (ie., close last night). The FTSE 100 (including re-invested dividends) dropped -4.152% over the same period.
Our multi-asset funds were more defensive. Our Growth fund, which can invest 100% in equities, fell by -3.196%, whilst our Balanced Risk fund declined only -2.239%. Our Cautious Risk fund performed the best, which is what investors expect in falling markets, and dropped just -1.787%.
Lower share prices create buying opportunities and as we believe the fundamentals for equities are reasonable for the long term investor, we used yesterday as an opportunity to take extra exposure in both the UK and US markets. So far, and it is just a short period, that decision has proved beneficial.
The Investment Team will continue to monitor conditions and risks, which abound, especially in the UK where the Brexit negotiations are having an adverse effect on the volatility of both the pound and the share prices of British companies. Do remember, however, that opportunities often come disguised as risks and we will be actively seeking out such opportunities.
I am going to cover Brexit and the trade wars at our December client seminars, in the meantime, we will keep you posted with developments.
Issued by Courtiers Asset Management Limited, CAM1018164. Courtiers Asset Management Limited is Authorised and Regulated by the Financial Conduct Authority - Register No: 616322. Address: 18 Hart Street, Henley on Thames, Oxfordshire RG9 2AU. Telephone: 01491 578368 Fax: 01491 572294 Website: www.courtiers.co.uk.
Warning – the views expressed by Courtiers in this summary and any video and video transcripts, are reached from our own research. Courtiers cannot accept responsibility for any decisions taken as a result of reading this document, watching the featured video or reading the video transcript and investors are recommended to take independent professional advice before effecting transactions. The price of stocks, shares and funds, and the income from them, may fall as well as rise. Past performance is not necessarily a guide to future returns.
We do not endorse nor accept responsibility for the content of any website not operated by Courtiers which you may visit by following a link from this article.
Seminars & Events
Valuable live commentary on the latest investment views and news, delivered with a unique Courtiers edge.Info & Booking »