July 2019: 3rd best month yet

Boris is bashing the pound, Trump is bashing the global economy. Who’d invest in anything, in this environment?

Well, when the Brexiteers pummel the pound, us globally diversified investors tend to do alright – provided we measure our progress in pounds! And FTSE-100 does alright too. This month was no exception; the GBP fell over 4% versus the USD, and FTSE rose over 2% partly as a consequence.

Bonds went up too, particularly in Europe (inc UK, obvs) – for reasons I’m not sure about.

Elsewhere was a bit more of a mixed bag – Oz equities steamed ahead, European/Asian equities sagged, the US shuffled forward.

Currency movements alone moved the markets I’m in up 2.7%, in GBP terms. Though the UK FTSE rose over 2%, my UK equity weighting is relatively low, so the diversified markets I’m in rose ‘only’ 1.1% in their local currencies during July (more thanks to bonds, than equities!). Combining the two effects means my market benchmark was a gain of 3.9% in July. Such months don’t happen often.

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April 2019: we’re back on top of the world

April was a fairly remarkable month, for my portfolio at least.

Image result for photos top of the world london
Can we get any higher than this?

It hasn’t been widely remarked upon, but the US stock market regained its all-time high – completely reversing the brutal Q4 performance. UK stocks had a pretty good month too, albeit (as shown below) they remain some way off their summer 2018 levels.

USA, UK and Eurozone equity performance over 2 years (exc dividends)

April saw the market tide lift all the equity boats that I track. Bonds plodded forward too – at least in the UK and USA. So the only asset class I saw fall in April was Australian bonds, with an election campaign underway.

What these market averages don’t reveal is some remarkable movements within the markets.

Though my investment approach is fundamentally an ‘asset allocation’ approach, I have a couple of sub portfolios within my USA equities which follow particular strategies. This gives me visibility on a couple of particular investment styles. I’ve written before about how my High Yield Portfolio has sucked; these days it is a very small sub portfolio, and thank goodness – because its recent performance continues to suck and in April it dropped 1.1%.

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March 2019/Q1 review

Well well. It’s the 31st of March and we appear to still be in the EU. Much as I am delighted we haven’t left, this does leave some much-sought-after clarity postponed. More on this later.

The wider world

In ‘mover and shaker’ terms, what’s been going on?

  • Mueller reported on Trump’s alleged collusion with Russia. Rather anticlimatically, from a London point of view.
  • Trade-related noises continued to emanate from the White House. Without much clarity.
  • Apple announced, erm, that it has spent $2bn on TV content. Yawn.
  • And UK democracy wriggled and writhed around the incoherent fantasies of Brexit and politics combined.

The markets

From a markets point of view, this backdrop felt rather similar to January and February, and sure enough March markets felt fairly similar to January and February markets.

As a ‘no deal Brexit’ scenario looked more likely, the pound declined off recent highs. We are back to £1:$1.30. That was the major currency movement to note; in the meantime the Euro has been declining against other currencies and the AUD is bouncing around in its own electorally-driven world.

Bonds had a stronger month than normal. The logic here evades even an avid FT reader like me. I think what matters is well put by Monevator:

A quick way to be called a moron by people who know more than they understand over the past 5-10 years has been to suggest that bonds still have a place in most portfolios. A wealth-destroying crash was “obviously” imminent, you see.

But markets often move in the way that surprises commonplace assumptions, and that’s certainly been true of bonds.

Monevator’s Weekend reading: Oops, bonds did it again, 22 March 2019

This lot left March markets looking as follows:

Market movements in March 2019, with weighted totals

Looking back 12 months, March saw equities return (admittedly briefly) to a positive return, leaving the Q4 20% correction very much behind us – though equities haven’t yet recovered to the heights of last summer. In the meantime bonds, which have been losing value through 2018, are now up about 5% from their Q4 nadir. A blend of both would, as so often, have stood an investor in reasonable stead.

Global equities & global bonds, over last 12 months, in USD

My portfolio

The March market movement, weighted for my target allocation, was up 2.6% (0.75% from FX, the rest from the leveraged play on equity/fixed income). My portfolio lagged this slightly, rising ‘only’ 1.9%. But for the year to date, and indeed over 12 months, I’m up 9%. That’s despite the Q4 correction setting negative records.

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