March was another eventful month for markets, characterised by unconventional conditions and significant events. The new US administration's confrontational and unconventional rhetoric since taking power in January has been a major driver of market dynamics.
The new administration introduced numerous executive orders, including measures to protect domestic energy security and establish the Department for Government Efficiency. Notably, the Department of Education was dismantled. Diplomatic and trade developments, such as talks of the US taking control of Greenland and Canada, renaming the Gulf of Mexico, and the controversial meeting with President Zelensky, created market uncertainty. Additionally, broad-based tariffs were imposed on numerous trading partners, including the European Union, India, and Japan, leading to retaliatory measures from countries like China.
Global equity markets saw significant declines since mid-February, accelerating in early April due to tariff announcements. Government bonds have been a relative safe haven, though long-duration US bonds showed rising yields, indicating waning confidence. US equities, Japanese equities, and oil were the key laggards this year, reflecting the impact of tariffs and global economic concerns.
Diversification and positioning for a different market environment are crucial. This includes reducing concentration in US equities, diversifying government bond exposure, and preparing for higher trend inflation and deglobalisation. Investors are encouraged to maintain a long-term view and avoid making hasty decisions during market stress. A robust investment process and discipline are essential, along with the value of financial advisers in helping clients navigate market volatility and make informed decisions.
A wealth of resources is available on Basecamp to assist advisers and clients in understanding market dynamics and making strategic decisions. While volatility is expected to persist, it presents opportunities for active managers to capitalise on market dislocations.
Given recent market volatility we've updated our client aids, which you might find particularly useful, helping to articulate key investing concepts such as 'time in the market' and why it's important to take a long-term view.
Invesco’s heritage in managing multi-asset investments for our UK clients goes back over 25 years. Our risk-targeted fund-of-fund and model portfolio service ranges providing simple, affordable solutions for you and your clients, and cater for a wide array of investment objectives.
The 4-Life framework helps put in place a robust retirement plan that explicitly addresses the risks people are increasingly facing as they seek to take control of their retirement path. Find out more.
In this regular piece, we summarise the key headlines from the quarter that have impacted investment performance.
We believe investors need to ensure they have alternative sources of diversification within their multi-asset toolkit. Georgina Taylor for the Multi-Asset Strategies UK team shares her views on the outlook and opportunities.
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Views and opinions are based on current market conditions and are subject to change. This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.
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