As we surpass the 1 year anniversary of the first UK lockdown, PM+M’s Neil Welsh looks back at how the stock market has performed over the past 12 months and how PM+M’s wealth management team have reacted to this whilst managing client investments.
12 months on from the very first UK lockdown and we’ve seen a period of investment performance that echoes that of the economy – parts have done well and others much less so.
It’s fair to say that the market has experienced exaggerated ups and downs during this time, and so it shouldn’t be a surprise to learn that market lows for many equity (share) indexes took place on 23 March, when the UK entered the first lockdown and uncertainty was felt across the globe. However, with government and central bank support following the ‘whatever means necessary’ mantra, the markets have fortunately bounced back. In the main, it has been a V-shaped and rapid recovery.
This bounce back has been beneficial for some – holding investments in more than 60 equity funds in the Investment Association’s investment universe would have more than doubled your money, whilst only two funds lost more than 15%. Whether this would have been good luck or good management, it is impossible to say, but this is one of the reasons why PM+M adopts a considered and diverse approach to investment. By utilising the skills of experienced third-party portfolio builders, along with that of our own, we are able to maintain and grow client assets in accordance with their chosen level of risk.
With all the usual caveats regarding past performance, together with the reminder that ‘by the time you can see a bandwagon you’ve probably missed it’, these are the top five winners and losers*
Premier Miton UK Smaller Companies 192.3%
MFM Junior Gold 160.5%
Legg Mason Royce US Small Cap Opportunity 147.4%
Baillie Gifford American 139.7%
Guinness Sustainable Energy 122.6%
TM Stonehage Fleming Aim 120%
LF Equity Income -62.9%
Aviva Investors UK Property -15%
Standard Life Investments Global Bond -14.6%
iShares Overseas Government Bond Index -14.5%
Threadneedle Global Bond -13.3%
(*Source – FE, up to 22 March)
The final three funds are united as a particular asset class (Fixed Interest) which have faced strengthening sterling and a rise in yields. This means a fall in capital value, as investors predict an improving global economy and more potential upside for equity markets. The traditional use of Fixed Interest as a diversifier is increasingly questioned and so, alternative options should be considered.
Again, this is where PM+M’s diverse portfolio approach and blending of passive and active funds can deliver value and reassurance.
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Remember that investments go up and down in value, and you could lose money as well as make it. How you’re taxed will depend on your circumstances and tax rules can change.