Market Insight 2021

Well, in the time it’s taken me to write this review, the outlook for 2022 must have changed about twice in respect to Omicron and central banks. I think that’s the best place to start in terms of summing up the year. It’s been one of rapid step changes between asset classes, geographies and cyclicality, essentially extreme volatility between winners and losers depending on what part of the year one chooses to look. It’s also been a seminal year for the retail investor and one in which history might reflect as the year retail money took on Wall Street, and...

In 2020, those companies in the MSCI All Countries World Index (ACWI) screened by their sustainable impact outperformed the MSCI ACWI as a whole by 27.8%. This part of the market really led global equities and offered stellar returns for our clients investing in this space. In 2021 so far this index has lagged the broader ACWI by as much as 19% at -0.05% (as of 15-12-21).

One may read the title of this note and find it hard not to question: ‘what about regulation? What about Evergrande? What about inflation and bottlenecks?’ And in the previous quarters of the year the inclination to agree with these tenets would have been easier. However, as we near the end of 2021 – a year which has blighted China and Emerging Markets as a whole – it seems that for numerous reasons, China could be a fertile territory for returns in 2022.

As the fiscal outlook of the Chancellor was being presented on Wednesday, it would be fair to say that viewers could slowly feel a metaphorical Tory galleon had set sail on a trajectory for what one could call no other than ‘tax and spend’. With no indication of National Insurance and Corporation Tax hikes being pulled back, and a major increase in public spending, Rishi Sunak’s proposals seemed a far-cry from the traditional Conservative governments of the past.

The market for ESG focused investment opportunities continue to grow at truly breakneck speed. According to Bloomberg, 2020 saw ESG assets surmount $35 trillion up 35% from 2016 alone, now comprising a third of global assets under management.

Did it happen? Didn’t it? Are we still waiting for it? These are Questions we have asked ourselves about the “re-opening trade” and recovery of the UK stock market in 2021, specifically the Small and Mid-cap sectors. Our view, pre-pandemic, was that the UK was trading at a discount to global markets. This opportunity was then exacerbated by a slower acceleration off the March 2020 lows, meaning the UK looked very much like the laggard in the developed markets. With Brexit in the rear view mirror and the UK consumer looking set to open their wallets in 2021, it looked...

As I sit at my desk postulating on our clients’ investment positioning, it dawned on me that many fund managers have never lived through an inflationary market cycle. Many managers have instead lived through a market almost entirely tilted to expensive fixed income, negative value, and long growth stocks. Unsurprising then, that much of this cohort are still firmly sat in the growth camp when it comes to investment positioning and remain reluctant to embrace the recovery of value. This chronic “group think” is not that hard to excuse when one considers the notion of value investing has been largely...

Many have said central banks are the punch bowl for markets. Loosely speaking this means central banks have been pumping money into markets in such volume that the equity rally is almost entirely propped up by that cash injection and, much like a huge bowl of punch at a party, it is the key factor in keeping the party going.

Last week the US hosted 40 world leaders for a two-day virtual summit on climate change, with newly elected President, Joe Biden, making it clear that climate is indeed a key focus for his administration. Having only recently re-joined the Paris Climate Agreement, the US took centre stage at the conference to demonstrate their commitment to tackling this existential threat to our planet, emphasising the need for collective action from nations across the world, many of whom joined the US in setting higher climate ambitions.

Model Portfolios are specialised investment vehicles designed to deliver a wide range of financial goals, at pre-agreed risk tolerances”. Sounds good doesn’t it? I often like to remind clients that a good model portfolio can consist in excess of 350 underlying companies.

Bitcoin, Dogecoin, Wowcoin – just what is all this about anyway? Far be it from us to try and make digital currencies seem straightforward, but like many investment professionals, TAM are watching closely and learning about these new innovations and debating whether they could benefit our clients’ portfolios.

It’s fair to say that it has been a challenging start to the year for ESG investments, coming off from the high of 2020 which saw strong performance and rapid inflows, into what has been one of the most powerful market rotations in recent history. Whilst any amount of underperformance is never desirable, when the potential for future gains is as high as it is for ESG investments, short-term setbacks such as these can be embraced, as we look ahead to the possibility of future rewards.

Sky News viewers were left perplexed last week as the Chancellor’s briefcase mysteriously changed colour from red to green in front of their eyes. A camera trick? Certainly. Symbolic? Curiously.

The UK economy has been one of the hardest hit by the COVID-19 pandemic, highlighted recently by data showing that output fell by 9.9% for the year 2020, which is the fastest drop in 300 years. Navigating through Brexit, at the same time as trying to contain a global pandemic would have been a tough year for any economy. However, the UK’s heavy bias to the service sectors, which includes some of the areas most affected by the lockdowns, such as hospitality, leisure, airlines and energy, meant that the UK was fending off punches from all angles. Unfortunately, this only...

As I am sure most of you will have seen in the news, just as the pro Trump assault on the US capital abates we see another assault on a different US institution, this time it’s Wall Street.

Watching Trump take off from the White House in Marine 1, peacefully I might add, has gotten me musing about the notion of the changing of the guard. I, for one, am going to welcome the return of policy coming from the Oval Office rather than Twitter and eternally grateful not to have a president using 1.00am tweets to influence the direction of the stock market. Like the White House, I think this market is, ironically, in the middle of a similar changing of the guard. Specifically, from stocks geared towards lockdown’s austerity, to those exposed to the likely exuberant...

Markets never cease to amaze, and as COVID ravages the world on its second coming, we also have the US democracy under pressure from Trump supporters as they created mayhem in the city of Washington and forced impeachment proceedings.