Market Insight 2022

December 2022

I asked, what should we expect in 2023?

I asked, what should we expect in 2023?
2023 is almost upon us and I asked our CIO James Penny, for his brief thoughts on what we can expect from markets next year. It’s no secret that many portfolio managers in Q4 2022 have been kicking back their 2023 outlooks for as long as they can. Some seasoned advisers might chalk this up to investment procrastination of which the industry is famous for but alas, in this instance, I think it’s more to do with the velocity of change in headlines and the markets’ sequential and often volatile reaction to that change in news. Indeed, the narrative around...

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November 2022

Why have Sharia portfolios outperformed this year?

Why have Sharia portfolios outperformed this year?
Sharia investing has by no means been immune from this year’s volatility, but the high-quality nature of the sector has helped to deliver good levels of protection for investors. Moreover, the defensive characteristics shown this year has cemented Sharia investing as a small but growing part of the market which continues to be as dependable in a bear market as it does in a bull market. Why? Sharia investing over the bull market of the last few years has kept pace with, and often exceeded, the performance of many of the world’s best non-Sharia “growth” funds which we know was...

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October 2022

ESG: Down But By No Means Out

ESG: Down But By No Means Out
After a tough start to the year for ESG investing, we are pleased to see a TAM ESG balanced portfolio outperform TAM’s mainstream balanced benchmark over a three- and six-month period as we closed in on the end of the third quarter. To provide some context, the wider market, from the outset of the third quarter, has seen the S&P 500 rally nearly 15% from the lows in Q2 then sell off back to those same levels. Much of the euphoria seen in the third quarter’s 15% rally has been down to a large sell off in the price of...

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October 2022

Is TAM avoiding the illiquidity rabbit hole?

Is TAM avoiding the illiquidity rabbit hole?
Most investors have exposure to open-ended funds and this week the IMF has issued a warning on the possible systemic risk posed by illiquid open-ended funds, the negative impact this may have and the possibility to destabilise prices and thus create harm for investors. On the face of it, it’s a scary statement…but one that has been aired before. Indeed some 3-4 years ago the FCA itself issued a warning to the markets about the potential of a liquidity crisis destabilising the markets for unitised products, then related to corporate bond funds. A liquidity crisis is defined by a wish...

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September 2022

What on earth just happened?

What on earth just happened?
For stock market geeks like me, yesterday will likely go down in history as a memorable moment in the UK, akin to that of a 2008 crash moment - one which people will be talking about for decades to come. What happened? It has all spun off Kwasi Kwarteng’s “Mini Budget” which has proven akin to a fiscal hand grenade thrown into the UK bond market. UK Government bonds, under the triple threat of a massive increase in UK bond issuance to fund the energy price cap, further interest rate rises and quantitative tightening (that’s the Bank of England selling...

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September 2022

Protection... What Protection?

Protection... What Protection?
Intuitively clients think that holding sovereign debt is a secure and dependable way to protect your hard-earned assets. It’s the government’s debt after all. Indeed, historically UK government fixed interest securities (gilts) have often been considered as the provider of protection for portfolios in times of stress. In a normal operating environment (whatever that is today!) market stresses, wars and economic turbulence usually lead to rising gilt prices and to gilts acting as a source of protection for an investment portfolio. In this economic cycle we are seeing the absolute opposite – and that’s because the stresses and strains are...

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August 2022

It's all about the long-term

It's all about the long-term
So, the market is bouncing back. 5 trillion dollars has been made in the market over the past weeks and the 15% plus rebound in equities has been well received across all our portfolios. With inflation in the US seemingly starting to roll over last week, the market reaction was swift and positive. The S&P 500, which is the US major stock index, made back 4 days of losses in a matter of seconds at the opening bell. A lot of this positivity stemmed from the second quarter earnings which have, on the whole, beat expectations and encouraged investors to...

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July 2022

Don't waste a recession

Don't waste a recession
As we close out the first half of what has been a very turbulent 2022 it’s worth looking at some of the victories and some of the setbacks which TAM has seen. Importantly, where we go from here remains paramount if one wants to see this as an opportunity and as the title says, not waste a recession. There is no detracting from the fact that both equity and bond markets have suffered collectively in 2022. With inflation proving extremely difficult to control, investors in both bonds and growth stocks, which have been on a parabolic rally since 2008, both...

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April 2022

Model portfolios – Why 60/40 doesn’t work!

Model portfolios – Why 60/40 doesn’t work!
Reading the latest investment surveys from the largest fund managers in the world, there remains an air of uncertainty in the top echelon of decision makers - a perception that we are marching towards a more challenging investment landscape than the last decade. Its effects on a bastion of wealth management, the 60/40 model portfolio, will likely lead to a revamp of the theory underpinning this behemoth style of investing. For now, the mood music in stock markets is turning increasingly pejorative when it comes to the prospect of economic growth in the next 12 months. This is framed against...

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March 2022

The fog of war

The fog of war
In recent weeks, Russia has progressed with a full-scale invasion of their Southern neighbour, Ukraine, under the orders of leader Vladimir Putin. Although the initial aggression was shrouded as ‘self-defence’, Putin’s intentions have proved barbaric with catastrophic loss of life as brave Ukrainians stand up to a tyrant. We sincerely hope peace will prevail and our thoughts are with the millions affected. It feels somewhat inappropriate to discuss investments at such a deeply sensitive time for so many. Unfortunately, the conflict shows no sign of slowing down and we believe it is at moments of great uncertainty where communication with...

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March 2022

So goes January, so goes the year

So goes January, so goes the year
Yale Hirsch, as well as being the quasi-demi-god of market patterns and cycles, also coined the phrase used for the title of this note. And so far, nearing the end of February as I write, Mr Hirsch’s adage seems to be playing out. And in some fashion. The S&P 500 is down -9.21% YTD and in January the index declined 5.26%, troughing to -11.4% at one point, surpassing its worst January level in history. So, as traders and investors battled an average daily volatility of 2.06% (double that of January 21’), what fell, why, and conversely, what held up? Inflation...

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February 2022

When a ‘barbell portfolio’ works

When a ‘barbell portfolio’ works
2022 has seen an unprecedented negative impact for long-term growth only investors. Some of the biggest, most renowned and highest performing funds of the past years have taken a quantum hit, falling anywhere between 13-30% in 6 weeks. Wow. At the same time the FTSE100, the UK bellwether index has gone… nowhere. If clients have not yet been asking what is happening… they soon will. The core of the problem is that the US equity indices are universally down but with the darling of the 2010s, the Nasdaq, down circa 13%. That’s a big hit in 6 weeks and leads...

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January 2022

Keeping a cool head is the key this month

Keeping a cool head is the key this month
January is usually when we reflect on the year just passed and look at tactics for the year ahead after markets tick higher on New Year positivity. Well, 12 days into the year, US CPI has hit 7%, a number not seen since the 80s, and the volatility in markets is already eye watering. It looks like markets have decided that the US Federal Reserve are actually a lot keener on raising rates than anyone knew. This is one of these scenarios we like to call a “known unknown” - people know it’s there but don’t know how to react...

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