Welcome to our quarterly investment review. Here’s a quick summary of the key elements (but to read the full report, click on the link at the bottom of the page):
- Q2 was very challenging for investors, no matter their portfolio risk positioning.
- Inflation continued to accelerate but headline numbers expected to fall sharply.
- Global equities fall across the board but remain the best long-term inflation hedge.
- Strong returns from commodities, but it does not make up for poor returns over many years.
Investors have experienced portfolio drawdowns over a short period during the first half of 2022. This may naturally have caused unease, especially for the more cautious and/or inexperienced of investors, who may not have been through such turbulence before.
The increased volatility reflects the sudden change in the economic landscape, and a reversal of the factors that have driven asset prices higher over a number of years i.e. monetary expansion and low inflation. Most central banks are now in an upward interest rate cycle with further increases due before the year end as they play catch-up in tackling inflation pressures.
Global growth is slowing and this will likely result in economic recession in many regions, but the hopes are that any downturn will be relatively short and release pressures that might otherwise cause greater damage later.
There has been some respite recently as Q3 has begun more positively, but it is not out of the question that lower values may be seen during the remainder of the year. Investing is a longer-term game and providing investors are diversified and importantly treat market falls as just a temporary loss of value, the volatility experienced should be accepted in return for higher returns going forward.
Click here to access the full version of Mike’s report: Q2 2022 Investment Review