Wealthify Performance - August 2019

Wealthify Performance - August 2019

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In August, Prime Minister Boris Johnson asked the Queen to suspend Parliament. Although this typically happens every autumn, what’s caught everyone’s attention is not only the timing of the request, but the longer than usual suspension period.

Suspending parliament (also called prorogation) would mean less time for anti-Brexit MPs to try to stop Britain from leaving the European Union. This shows that the PM has tried his utmost to stick to his campaign promise of ensuring that Britain leaves the EU on 31st October, with or without a deal.

Looking elsewhere, we have perhaps witnessed a turning point in the China – US trade tiff. Until now, China has retaliated in kind to every US tariff increase, but they’ve remained silent after the latest ones were imposed. This may signal their desire to end this current feud, and one thing’s for sure, a truce between these two super states would certainly increase optimism around global trade, and in turn economic health.

In Europe, unemployment figures were a continued bright spot in the Eurozone. Data released in July suggests unemployment stands at 7.5% which is at an 11-year low! But it’s worth noting that there are stark variances between the different member states, ranging from 3.1% in Germany, to as high as 17.2% in Greece.

Markets
Historically, August has been a choppy time of year for global stock markets due to the long summer holidays. This year has been no different – while market participants have been enjoying sometime in the sun, there’s been a grey cloud over stock markets as they react to concerns of a potential global recession.

The UK’s FTSE 100, representing the largest companies in the UK, finished the month -4.07% lower. The culprits are predominantly in the commodities sector (including BP and Rio Tinto) which is known for performing poorly when there’s pessimism about global growth.

US shares fared slightly better than other regions, with the S&P500 losing -1.58%. For a change, it wasn’t the exciting tech companies buoying the market, but instead more mature, typically less ‘rock and roll’ companies stole the show. US consumer spending has been an economic bright spot for some time, and it shone through in August when the likes of Walmart and Target released glowing quarterly results. In fact, Target did so well, investors rewarded the company with a 23.86% surge in its share price for August – the biggest monthly gain the company’s share price has seen since the year 2000.

As a region, Europe ended the month down -1.26%, slightly better than expected, as investors rushed to buy shares in companies likely to perform well should the global economy start to falter.

Other regions looked less attractive; Emerging Markets (-4.85%), Asia Pacific (-4.31%), and Japan (-3.72%) which were all affected by the lack of negotiations in the US and China trade talks at the beginning of August. If China and the US can resume productive discussions as they have eluded to more recently, there may be light at the end of the tunnel and a little less uncertainty in the world. We’ll have to wait and see.

Currency
The British Pound’s performance was a mixed bag. It declined against the Japanese Yen (-2.38%), flat against the US Dollar, and rose only slightly against the Euro (+0.82%).

Investment type performance breakdown
Performance among the investment types in your Plan this month was mixed, with shares down (-2.60%) and commodities (-2.40%), but better performance global property up +1.38% and our bond investments +0.49%.

Summary with Plan details
Our higher risk investment Plans have seen a decrease in returns during August that is expected with the weakness we have seen in global stock markets. Our investment plans that hold more bonds and other low risk investments have seen minimal movement throughout the month, or even a small gain.

Our investment team will continue to monitor the markets to keep your Plan on track. We’ll only make changes if we think it’s necessary to protect the long-term value of your Plan. If we do make any changes, we’ll let you know.
 

The figures shown are based on a medium-risk (Confident) investment Plan.

Please remember the value of your investments can go down as well as up, and you could get back less than invested. Past performance is not a reliable indicator of future returns. 

 

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