Wealthify Performance - January 2020

Wealthify Performance - January 2020

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As we enter a new decade, Britain has officially left the EU after 47 years of membership. Now in a transition period, the UK must negotiate new trade agreements with the European Union before the self-imposed deadline of 31st December 2020.

What does this mean for the future of the UK? No-one can say with certainty. However, change typically creates opportunities that cannot be seen before it happens, so we remain cautiously optimistic about the future prosperity of the UK.

Turning our attention to the United States, they’ve now entered a presidential election year. Between now and June, the Democratic Party will pick its candidate to face the Republican Party incumbent, President Donald J. Trump. This is done through a series of primaries and caucuses where residents in each state select their preferred candidate.

Looking across at the Eurozone, declining economic growth endured by two of the bloc’s largest countries, France and Italy, dragged overall growth in the region lower, +0.1% in the fourth quarter of 2019 versus expectations of +0.2%. But, in a world where bad news is good news, some economists are forecasting fresh stimulus from the European Central Bank which has historically supported the region’s financial markets.

Market Performance

Following a strong finish to 2019, the coronavirus outbreak is leaving its mark on global stock markets. Although at the time of writing there’s been a rebound in performance, January was a negative month for most global stock markets. Our Head of Investment Strategy, David Semmens, answers some key questions on the coronavirus and what it means for your investments here.

The FTSE 100, representing the UK’s largest public companies retracted by -3.92% in January. The move is led by a sharp decline in oil prices, down -11.88% for the month owing to speculation that the coronavirus will have an adverse effect on global growth. This matters because the FTSE 100 is home to a number of commodity companies, including two of the world’s largest oil producers, Royal Dutch Shell and BP.

US shares were the bright spot amongst the markets we follow, up +0.26%. This is due to the US stock market having a limited number of commodity companies, combined with a much higher domestic focus compared to other markets. Also, there seems to be no stopping their technology sector which continues its surge higher, with the top two performers in the US being Microsoft and Amazon.

Europe (-1.84%) and Japan (-1.90%) ended the month somewhere between the performance of UK shares and US shares.
Asian and Emerging Markets delivered returns slightly worse than the UK, at -4.20% and -4.98% respectively.

Currency Performance

In January, the pound’s performance versus major currencies didn’t change much; Euro +0.69%, -0.63% Japanese Yen, and the US Dollar, -0.39%.

Investment Type Performance Breakdown

Performance among the investment types in your Plan this month was mixed, with bonds up +1.17%, global property up +1.87%, and shares down -1.23%.

Conclusion

Owing to the combination of conditions explained above, performance for our Plans this month was mixed. Plans that hold more bonds delivered positive returns, whilst Plans with more shares saw negative returns, reflecting global stock market movements. However, even Plans with the highest number of shares saw a less than 1% drop in value thanks to the diversification of our investment plans.

As always, our investment team remain focused on keeping your investment Plan on track and are ready to act as opportunities arise.

 

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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