Looking into 2016 we continue to see positives for investors, especially for those willing to ride out short-term bumps and focus on the medium to long term gains.
Reflecting on the past 12 months, the cumulative effect on markets of the year’s various dramas – Chinese slowdown, uncertainty over US monetary policy, the commodities slump and so on – was surprisingly mundane. Overall, most investors saw their portfolio’s grow steadily in excess of inflation and/or bank deposits.
Although this year feels as though it has started with a whimper there are some encouraging factors;
- US monetary policy has started to take a smoother path as the Federal Reserve announced a very modest increase to interest rates. This is a big sign of confidence in the overall US and global economic recovery.
- In terms of geographic sectors, Emerging and Chinese financial markets have been ravaged in the past year, arguably giving an opportunity for investors as they look ahead
- Within the UK, the FTSE 100 has been hit by fluctuations in commodity prices affecting the valuations of mining companies such as Glencore, as well as oil companies such as BP and Shell. As with the Emerging markets, this has given a great ‘buying’ opportunity for investors.
It would be great if we were just positive about the future but that would be naive. For example, the upcoming referendum on EU membership will certainly create some uncertainty and volatility in the UK for the short term.
However we are confident that this unsettled period will be fairly short-lived and during these times opportunities will abound for fund managers focusing on good research and selective stock picking.
2016 will no doubt bring some ups and downs in terms of portfolio valuations but the overall trend should remain positive for clients who are diversified in terms of fund choice and asset allocation.
As always investors will benefit most where they hold a diverse range of investments and asset classes ranging from corporate bonds and property through to UK and global equities.
For our existing clients we continue to review their holdings and help position their plans to hopefully reduce instability without jeopardising investment returns.
Please get in touch with Platinum if you would like to discuss your investment strategy or if you have any concerns.