The Month in a Minute
Conflict in the Middle East and worries about AI caused short-term volatility in February, but diversification and gains outside the US helped deliver broadly strong returns. Investors moved away from large US tech into mining, energy, defence, and smaller companies, boosting UK and Japanese markets as a result. This shift helped deliver a strong month for Wealthify Plans, which benefitted from our recent shift to Japan, large UK companies, and value shares.
Diversification the North Star, despite conflict in Middle East
The biggest story affecting markets in February was the escalating conflict in the Middle East. Although the rest of March will provide a clearer picture of its longer-term impact on investments, the conflict has, unsurprisingly, created short-term volatility.
At times like this, a simple checklist can help keep you – and your financial goals – on track.
- Be aware of why it’s happening — just don’t react to what is happening.
- Markets usually just need a bit of time to find their feet, readjust, and bounce back.
- Remind yourself why you started investing in the first place, including your long-term goals.
- Let our experts take care of all the noise, as they've dealt with plenty of situations like this before.
Even in the face of rising geopolitical tensions, February still managed to provide a month of broadly strong returns.
As worries surrounding the Middle East situation grew – coupled with concerns about AI’s potential to disrupt existing business models – investors moved away from big-name US tech companies.
Naturally, American markets took a hit, as investors shifted money to smaller companies and more protective assets such as mining, energy, and defence.
The big winners of this change? The UK and Japan.
Thanks to their lack of exposure to volatile tech stocks, UK markets hit multiple record highs. This was no more evident than the FTSE 100, which benefitted from its heavy weighting towards mining, energy, and defence.
In Japan, election results boosted investor confidence in the country’s economic future, leading to some of February’s strongest returns.
And it’s these non-US profits that provided yet another lesson on the importance of diversification.
Thankfully, with Wealthify’s team of experts managing everything for you, your Investment Plan is diversified to offer protection during volatile times — and opportunities when conditions improve.
With investing, your capital is at risk. Please remember the value of your investments can go down as well as up, and you could get back less than invested.
Wealthify does not provide financial advice. Please seek financial advice if you are unsure about investing.
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