With the end of 2017 just around the corner, we consider some of the key economic movements from the year, as well as market and portfolio performance in November.
2017 has been a big year, both for the markets and Nutmeg. Global economic growth has started to really gather momentum this year, while here at Nutmeg, we recently celebrated our fifth anniversary, coinciding with us publishing our five-year track record.
The past five years have been both challenging and exciting in terms of understanding the dynamics of financial markets and managing our customers’ investments.
Back in 2012, the global economy was still emerging from the global financial crisis. And central banks were expanding the experimental policies they had put in place to support the healing of the global economy.
Five years down the line and the global economy is now doing quite well. However, we’ve seen some quite significant economic and geopolitical events over the past five years that have had quite a dramatic impact on markets and how we manage investment portfolios. These include the Greek crisis, European bank woes and big changes in Chinese policy, and more recently, the Scottish independence vote, Brexit and the US elections.
2017: highlights and lowlights
2017 has been a particularly exciting year for the markets. The global economy is, for the first time in a long while, firing on all cylinders.
Global growth is becoming more synchronised, with emerging markets and developed markets doing well at the same time. Furthermore, Chinese policymakers are increasing their efforts to open up their markets to overseas investors.
Divergent performance for equity markets during November
November was an interesting month for the markets, with equity markets performing quite differently. Normally, most regional markets perform in line with each other.
However last month we saw quite divergent performance; for example, the UK market lost almost 2% while the US market was up by almost 3%. The same was true within emerging markets; Latin America saw some quite big losses, while most Asian markets produced positive returns.
Nutmeg portfolios: flat performance
Performance for our fully managed portfolios was relatively unchanged for November: we saw losses of around 0.1% to gains of up to about 0.4% depending on the portfolio risk level.
No recent changes to fully managed portfolios
We look at risk and markets daily to understand what’s driving performance. The fundamental data underlying our existing views and how we’ve positioned portfolios has been reinforced in recent weeks, so our decision not to make changes to our portfolios at the moment is an active one. In other words, “if it ain’t broke, don’t try fix it”.
The global economy is looking even healthier as we head into 2018, particularly in developing economies, and that’s really strengthened our rationale for how we’ve positioned our portfolios to take advantage of improving growth. This, of course, doesn’t rule out making changes in the future, but we’re happy with how we’ve currently positioned portfolios.
Risk warning: As with all investing, your capital is at risk. The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest. Past or future performance indicators are not a reliable indicator of future performance.
About this update: This update was filmed on 4th December 2017 and covers figures for the full month of November 2017 unless otherwise stated. Data sources: Bloomberg and Macrobond.
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Shaun Port
Shaun is the chief investment officer at Nutmeg. He has over 25 years’ experience developing and implementing investment strategies for clients ranging from central banks to pension schemes to charities and private individuals. Shaun holds a degree in Mathematical Economics from the University of Birmingham and is a Chartered Alternative Investment Analyst. He can be found tweeting @ShaunPort.Other posts by Shaun Port
