Market updates and portfolio performance review

As we speed towards yet another Christmas, now seems a good time to provide a ‘financial market update’ to summarise how the financial markets are faring since covid began, and provide a little insight into how our Legal & Medical portfolios are performing.Whats happening with the financial markets and Legal & Medical's portfolios?

Global Markets

Having already seen some broad market recovery during the latter part of 2020, 2021 continued with some cautious optimism, which resulted in positivity as global vaccination programmes progressed.

Global markets, on the whole, have continued the relief-rally as the effects of the pandemic have somewhat dissipated, and hope that a new “normal” will return. Added to many countries continued central bank policies of ultra-low interest rates and quantitative easing, then, we have seen sustained and resilient market growth. 

China raced ahead in the first quarter. However, in recent months the country has seen a significant pullback as their government seems to have continued with its policy of “Regulation”.   Therefore, in my opinion, China has seen foreign investment reduce, but most importantly, a reduction in foreign confidence.  

Is China a trusted partner? If not, then being the second-largest economy in the world will only take you so far! If regulation and conditions are such, fund managers/investors will feel that profits/growth could be impacted and will look elsewhere!

The US has shown resilience and attendant growth in its main indices, with new highs reached regularly. The same can be said for several other geographical regions, although not so much closer to home. The UK – in the shape of the FTSE100, has continued to progress since the beginning of the year, although it remains around 5%-6% below its pre-pandemic high in January 2020.  

In the last quarter, I felt despite the spectre of rising inflation with continuing stimulus of billions and billions of pounds/dollars/euros (and any other currency you care to mention) and a hopefully, receding pandemic, pent-up corporate and personal demand markets would, despite inevitable “bumps in the road”, continue to push forward.  

By and large, this has happened, but inflation is becoming more of a concern. A decision by Central Banks to increase their respective base rates to try and tame inflation would have a knock-on effect on markets. However, I still feel they will prove to be relatively resilient. 

As for the UK, it has lagged and continues to do so.  However, in the last couple of months, the markets have started to move forward strongly and I believe they remain on course for a reasonable end to the year…assuming a lockdown is not implemented!

Markets are no longer anywhere near as skittish as in those early weeks of the pandemic. They are increasingly coming to terms with Covid-19 and have ‘priced in’ the risk of the virus to the global economy. Whilst there are no guarantees, history does show that markets recover – indeed have already more than recovered (in the US for example) from events such as these, as we saw with the Financial Crisis.

Legal & Medical Portfolio’s

Things are looking pretty good…

We made some changes to our more speculative portfolios, including the Cautious, Moderately Adventurous, Adventurous and Speculative portfolios, in the last couple of months, to reflect the additional growth that we felt could be generated, particularly by UK centric funds (and more particularly UK small companies). At the same time, we maintained a high level of exposure to the US. This approach has paid dividends – literally! As a consequence, the portfolios continue to show strong growth.

The majority of our clients use our Moderately Adventurous and Cautious portfolio’s. These portfolios have shown growth in the last 6 months of 8.9% and 6.82%, respectively.  The “Adventurous” portfolio has shown growth of 9.73%. The “Speculative” portfolio has shown growth of 7.77%. This “lower” growth rate realistically represents the drop in performance in funds that have exposure to China, namely emerging market funds. As investors expect, the Speculative portfolio would always maintain a higher weighting to emerging markets. At the same time, they would also expect the portfolio to be more volatile as a result. This has been the case over the last six months. But the growth of 7.7% is not to be sniffed at! The FTSE100, measured over the same period, has grown at 6.79%.

We enter the final quarter of the year optimistically. Our portfolios continue to perform well, and there is no reason to suggest that this shouldn’t continue.

As always, if you feel you need to talk through your portfolio with your adviser, please get in touch.  After all that’s what we are here for!

Figures accurate as of 02/11/2021.

What are your thoughts on how the global markets are recovering?  Let us know by leaving a comment below


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