Focused on risk management
By: Marchello Holditch, CFA
Vice-President, Multi-Asset Management
Risk assets across financial markets, such as equities, high-yield bonds, real estate and currencies, have lurched lower since the beginning of October. It may be a surprise to some investors that U.S. equities were the only major asset class globally to provide strong returns for 2018 up until the October retreat. In October, the U.S. joined the rest of the world as its technology titans, which led the bull market for much of the year, experienced the largest corrections. From October 3 to November 20, 2018, the FAANG stocks (Facebook, Apple, Amazon, Netflix and Google’s parent Alphabet) lost a combined $728 billion.
The correction was not only driven by overvaluations but also fundamental challenges. The U.S. is confronted with the fading effects of a tax cut, quantitative tightening by the U.S. Federal Reserve and an uncertain trade relationship with China. Political uncertainties surrounding Brexit and the Italian budget are coinciding with slower economic growth globally. It’s not unreasonable to think that the trajectory of the global economic expansion is on a glide path lower. The recent correction may appear unusual since volatility has been low in recent years but I would like to remind investors that pullbacks are not surprises – we plan for them. Our solutions are based on a disciplined investment process and are designed to weather any market condition.
During the market correction, we performed well versus our peers. Read the rest here >> November 2018