Lessons from 2017 and the outlook for 2018

2017 was noted for its lack of volatility, and this can be seen strongly in the performance of global equity markets. For the first time, global equities (based on the MSCI ACWI’s 30 year history) saw a rise in every month of the year. The US market (S&P 500), while not posting a rise every month, saw a positive return every month once dividends are included, the first time since 1958. The largest fall for the US market intra year was 3%, which is the smallest intra year fall in any calendar year in the post war period.

Another area of note were signs of , most notably with the interest in cryptocurrencies. Bitcoin saw a rise of 1,300% and created billionaires of the Winklevoss twins, who were previously known for claiming Mark Zuckerberg stole their idea for Facebook. It was also reflected in the art world, with a world record $US450m paid for Leonardo Da Vinci’s Salvator Mundi, shattering previous records – over double the previous record for a painting sold at auction and a third higher than the highest private sale.

So after a record breaking year, it is worthwhile reflecting on what lessons we can learn from last year.

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Growth, inflation and central bank cocktails

November was on balance another good month for risk assets reflecting an ongoing cocktail of reasonable growth, low(ish) inflation and gun shy central banks. Equity markets gained (with the exception of the UK and Europe) and credit spreads retraced some of their recent modest widening. Also helping performance was a rally in Australian bonds (as the RBA showed little sign of raising rates), a weaker AUD and a rally in GBP as the UK moved closer to an agreement on Brexit.

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Lessons from our elders

22% of people in pension phase feel underfunded, globally  Funding retirement is at the forefront of many people’s minds, but how well are they preparing for it and how do those already in retirement feel about their situation? We spoke to over 22,000 people who invest from 30 countries around the globe about retirement to see if and how expectations differ from reality.

For the full results of the Schroders Global Investor Survey, read more here…

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Lessons learnt since 1987

The first is that this job is hard. While it’s easy to look back and identify what you should have done, it’s much harder to make decisions in real time, looking forward into a future that is in large part unknowable. While technology means we can now process more data better and faster (and as a result have better back tests) it doesn’t change the fact that the future is inherently difficult to predict. Being wise in hindsight is popular but unhelpful.
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3 critical issues for investors today

Markets are enjoying a cocktail of somewhat synchronised global economic growth, positive but low inflation and central banks with their feet still on the accelerator. This is a potent mix that will require investors to focus on some important but interconnected areas.

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