October was action-packed in global politics. We saw Catalonia declare short-lived independence, followed by the Spanish Government taking control over the region, dissolving its parliament and announcing new elections in December.
Political developments in Japan were among the events that helped generate healthy growth for customer Plans in October. Incumbent Prime Minister Shinzo Abe’s snap election secured him a ‘super’ majority, and prompted Japan’s leading stock market, the Nikkei, to soar to highs not seen since the early 90s. This is good news for Wealthify, since our investment team had increased the allocation of Japan-based investments in customer Plans ahead of the event.
In the currency markets, the Pound has seen mixed results against other global currencies through October and has begun November on a weak foot. The turning point was the Bank of England’s decision to raise the UK base rate for the first time in ten years. Typically, you’d expect a currency to increase in value off the back of a rate rise, as demand for the currency increases. However, the Pound defied convention and did the opposite, dropping in value by 1.4% on the day against the Dollar. The cause was sentiment – markets were expecting a series of gradual rate rises in 2018, but the rakish nature of the Bank of England’s announcement suggested this may no longer be the case, causing a drop in investor confidence and a boost for Wealthify Plans, thanks to the breadth of non-sterling investments we hold.
As you know, Wealthify Plans contain a variety of investment types, all of which have delivered positive returns in October. Commodities (e.g. grains, gold, coffee) returned +3.25%, private equity returned +1.01%, bond investments (corporate and government) returned +0.50%, property delivered +0.21% growth, and equity investments (i.e. shares in companies) grew by +3.24%.
Each of our five investment styles (Cautious to Adventurous) delivered good positive returns for customers in October.