One-year performance doesn’t form the basis of our decision-making – we adopt a buy and hold strategy. However, we know it is important to see how your investments are performing, so here’s a quick overview to what happened in 2019.
The headline news: It was a good year for nearly all asset classes and a great year for some. Global equity and bond markets added $24 trillion to their values, after a process of re-liquifying began, despite the seemingly endless stories concerning trade between the US and China.
At the end of September, the US Treasury Index was outperforming the MSCI World Index, a highly unusual event. Another precautionary interest rate cut in October helped this process further.
Several risk factors that could have affected global markets were avoided in the closing stages of the year, for example, the threatened tariffs on China were not implemented, and job growth in Europe and the US remained decent.
The Shanghai Composite Index had its best year since 2014, the Dax in Germany since 2012, the US S&P 500 since 2013 and France’s CAC 40 saw its greatest gain since 1999.
Asia and emerging markets experienced lower gains in equities, but better performance in bonds, relative to their developed cousins. US Treasuries suffered their biggest bond yield fall since 2014, dropping to levels not seen since the 2007-09 crisis, although overall returns were up by a respectable 6.9%, with Europe also up 6.8%.
Looking at factor returns, there was very little dispersion between World Momentum Small Cap, Minimum Volatility and Value, all rising by between 21.4% (value) and 27% (momentum), again pointing to liquidity, rather than individual characteristics dominating trading.
Closer to home
UK Gilts saw an 8.8% return (beaten only by Italy’s 11%), as a combination of Sterling strength and overseas investment pushed our assets higher. This was helped in December by the Conservative’s election victory, which removed the threat of widespread utility renationalisation and took the FTSE All Share Index to its best year since 2013.
Not to be outdone, precious metals also had a good year, with both gold and silver seeing their best returns since 2010, rising 18.5% and 15.5% respectively in Dollar terms.
Now the Withdrawal Bill has been passed and Brexit is underway, we expect little will change until the end of this year, whilst trade terms are thrashed out with Europe.
What this means for you
Overall, 2019 turned out to be a good year for world markets and therefore, our clients. That said, we firmly believe the most important aspect of financial planning is making sure your investment journey continues to meet your objectives. This means not only correctly diversifying your portfolio, but also keeping charges low and undertaking regular reviews to keep you on track.
To find out more about our investment philosophy, don’t hesitate to contact me on (01246) 298181 or email: email@example.com