Nick Georgiadis: third quarter 2019

Global financial markets experienced significant volatility in the third quarter.

Shares fell in August amidst an escalation in the US-China trade war and signs of slowing global economic activity. However, supportive measures from central banks meant that by the end of September markets had more than recovered their losses. Global equities rose 4% in the quarter, taking the MSCI World’s year-to-date gain to 22%.  

With share prices rising and forecasts for profit growth falling, equity valuations have risen slightly over the quarter. We currently have a neutral allocation to equities, in-line with our long-term targets.

We have been increasing our allocation to alternative investments, which can provide attractive returns with less volatility than equities. One example of this is Schroders Diversified Alternatives Assets Fund, which provides broad exposure to a range of specialist investments, including infrastructure and music royalties.

While there are signs that growth is slowing both in the US and globally, we do not think a recession is imminent. We continue to monitor incoming data closely and will make changes to portfolios as required.

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