Nutmeg investor update: May 2024

How did global markets perform during April? 

Overall, global stock markets fell -2.9% in net total British Pound returns in April. While most markets were down, notable exceptions were the UK and emerging markets, which have both benefited from a steep rise in mining commodity prices.

The FTSE 100 is home to several large mining companies. One of them, Anglo American, was also the subject of a takeover bid from rival BHP Group during April. 

Bond markets were also weak in April as yields rose after expectations for central bank rate cuts were reversed. This was driven by better than expected economic data and inflation readings that raised questions about how far inflation can keep falling.

It was an example of when good news on the economy can be bad news for markets. In the year leading up to April, much of the market's focus was on rate cuts, so the unwinding of these expectations drove April's market moves.

How are Nutmeg portfolios currently positioned? 

Despite April's setback, world equity markets are having a pretty good year, up 6.7% in net total returns in British pounds.

We remain overweight equities and we continue to see economic data supporting the rationale for this, even if markets are having to readjust to the likelihood that central banks will need to provide less stimulus.

I mentioned the rise in mining commodity prices in April, and this is independent evidence of an improving economic environment. 

We made two changes to portfolios at the beginning of April.

First, we reduced exposure to the Chinese stock market by replacing half of our broad-based emerging markets position with an ETF that holds emerging market indices excluding China.

We see increasing isolationist policies in the way China deals with the world, which has implications for western investors in China's tech sector, in particular. 

We also took the decision to swap our US treasury exposure into gilts, given the likelihood that the Bank of England will move to cut rates before the Federal Reserve. 

You can read more about our portfolio change in emerging markets in a recent article. 

Can you give us more insight into the investment team's economic outlook for the months ahead? 

We are watching for the global trade picture to keep improving. Our economic view is for continued modest growth, and a key area to watch globally is wages growth.

As long as wages growth doesn't outstrip the ability of economies to supply goods and services, modest economic growth will not prevent central banks from delivering rate cuts later this year and into 2025.

Nutmeg customers may benefit from good returns under our base scenario of moderate to low inflationary growth. Remember though, that long-term future returns are expected to be in line with your chosen level of risk; and also that the value of your portfolio can go down as well as up. 

The Nutmeg investor update is also available as a podcast. Listen to this month's update below. 

About this update: This update was recorded on 7th May 2024. All figures, unless otherwise stated, relate to the month of April 2024. 

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 performance and forecasts are not reliable indicators of future performance.