Investment Clock insights

2018 Q2 Market Review: Volatility Creates Opportunities


Trevor Greetham

4 July 2018

Global and UK stocks are flat year to date (chart 1) but volatility has risen substantially from the very low levels seen in 2017, reflecting growing evidence that economic growth is slowing, especially outside of the US. Increased volatility provided opportunities for our actively managed multi asset funds. We cut the size of our overweight in equities in the Royal London Global Multi Asset Portfolios (GMAPs) at the late January highs and bought back aggressively during the February/March market panics. We have since taken profits at higher levels and the overweight in equities is now at its lowest level since the GMAPs launched in March 2016.
 
See below for details and a commentary on the multi asset returns over the second quarter of 2018 and year to date. Also below, a snapshot of how we are currently positioned, broadly neutral at the asset class level but with equity exposure skewed towards the defensive US market and away from the emerging markets.

Global and UK stocks are flat year to date (chart 1) but volatility has risen substantially from the very low levels seen in 2017, reflecting growing evidence that economic growth is slowing, especially outside of the US. Increased volatility provided opportunities for our actively managed multi asset funds. We cut the size of our overweight in equities in the Royal London Global Multi Asset Portfolios (GMAPs) at the late January highs and bought back aggressively during the February/March market panics. We have since taken profits at higher levels and the overweight in equities is now at its lowest level since the GMAPs launched in March 2016. 

See below for details and a commentary on the returns of different asset classes over the second quarter of 2018 and year to date. Also below, a snapshot of how we are currently positioned, broadly neutral at the asset class level but with equity exposure skewed towards the defensive US market and away from the emerging markets.

UK and Global Equity Markets, total return in sterling terms

 

Source: standard indices sourced from DataStream and Bloomberg

Current positioning

Source: RLAM as at 4 July 2018

Positioning as of July 2018

See ‘De-risking for a Soggy Summer’ for rationale

Past performance is no guide to the future. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.