Markets

Value investing has been the clear winner of the first third of 2022, with the tech-heavy Nasdaq leading losses in global sharemarkets.

It has been an incredible few months in markets, with the tech stock selloff, compounding into a crypto rout, all with the backdrop of the worst performance from bond markets in decades.

Ruffer LLP’s single strategy approach, which is a multi-asset class, diversified fund seeking to deliver consistent returns and limit drawdowns in every market cycle is increasingly rare in an environment dominated by thematics.

March stands out as being one of the most difficult periods for investors in a generation. On the one hand, bond markets send fixed income to its worst return in more decades, and on the other, equity markets were sold off broadly on valuation concerns as bond yields ended a forty-year downward trend.

Markets are falling, interest rates are rising alongside inflation, the US dollar is appreciating along with bond yields and money is moving away from risk. While the crisis in Ukraine still plays out, it certainly has exacerbated risks surrounding growth and inflation.

Independent investment consulting firm, Evergreen Consultants, has released findings on the performance of green Australian and international equity funds that have high responsible investment ratings.

Alternative investments are gaining popularity, mainly due to their low correlation to more traditional assets such as stocks and bonds.

The Reserve Bank of Australia officially joined the hiking party this month, and while the implications for Australian homeowners and businesses is important, it has little impact on the global economy.

In their latest quarter fixed income outlook, titled ‘Investing Through Inflation and Growth Uncertainty’ global asset manager Neuberger Berman has flagged somewhat of a non-consensus view on the outlook for inflation, growth and fixed income assets.

“Patience is a virtue” may well be the best way to explain the performance of the Australian sharemarket in the March quarter.

The VIX Volatility Index or Fear Index hit a 52-week high of 38.94 last week after $65bn was wiped off the Australian share market.

The classic way of thinking has been to ditch bond funds as interest rates rise. Why? Because as rates rise, bond prices have an inverse relationship, and drop in value as newer bonds with higher yields become more attractive. Sounds about right?