Strategy & economics
Nick Georgiadis: third quarter 2019
Growth is now slowing in the US and around the world – but we don't think there will be a recession in 2020
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.
This article is issued by Cazenove Capital which is part of the Schroder Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested. This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements. All data contained within this document is sourced from Cazenove Capital unless otherwise stated.