Will Bartleet, CIO and Portfolio Manager of Pacific Multi-Asset
Choppy markets after flat calm
After months of plain sailing in markets, a squall has buffeted markets over the last month. Global equities when measured in Sterling have fallen 4.5% from peak to trough. In the US, equity markets had gone 110 days without falling 1%; they typically fall that much every 11 days. That run inevitably came to an end in March.
The cause of the fall in markets however, is shared equally between equity and currency markets. The news of a snap election in the UK has caused Sterling to rally as investors have taken the view that a conservative majority lessens the chances of a hard Brexit. The Pound's recent rise, most notably against the dollar, has been a strong tide for a Sterling investor to navigate, pushing down the value of overseas assets.
After a period of unusually low volatility, such events are an inevitable feature of investment markets. Multi-asset investors enjoy the benefit of diversification in such events, reducing the impact of market falls. Finally, volatility provides opportunities to buy into weakness of asset classes that have been caught up in the cross currents of markets.
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