Equity markets were modestly weaker in August, having been down mid-month and bounced in the second half of the month. The US stock market was the most resilient, supported by a resurgent Dollar whilst Asia and Emerging markets fell over the month. Within Emerging Markets, the allocation to Pacific North of South Income Opportunities fund was the standout performer and continues to generate strong outperformance of the EM index.
Fixed income was a slight negative over the course of the month, with Fitch downgrading US creditworthiness from AAA to AA+, citing concerns about US debt policy and political functioning. This, combined with the announcement of more debt issuance in the US led to bond yields moving higher, particularly at the longer maturity end of the US debt curve.
Finally, in a month where both equities and bonds returns were negative, diversifying assets generated positive returns over August.