- Investment Manager
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We keep a close eye on global market developments, and each quarter we share an overview with our clients to keep you up to date and informed. In Q3 (June to September 2021) the economic backdrop remained relatively stable on the whole with growth being strong in most areas. Manufacturing and servicing continue to show expansion, and corporate earnings have seen more upgrades than downgrades as they improve and economies continue to reopen.
Stock market returns were more mixed, with concerns around the impact of the delta variant, inflation, interest rates, supply issues and the Chinese Government’s regulatory clampdown on certain sectors all impacting to varying degrees. In the UK, growth continues to be strong with a recent upward revision of Q2 from 4.8% to 5.5% – way above consensus expectations. In the US, growth forecasts were cut back as the delta variant had impacted the speed of recovery. They had been revised for 2021 from 7% to 5.9% and from 3.2% to 3.8% for 2022, meaning both forecasts remain significantly above long term averages. As economies continue to improve, inflation expectations have continued to rise over the quarter. Supply issues and energy prices have also accelerated short term inflation numbers, which has impacted government bond markets as expectations around interest rates potentially rising earlier than forecast have increased. Central banks are continuing to provide support to the markets and governments fiscal policy such as the proposed infrastructure bill in the US.
Turning to the investment outlook in the short-term, we continue to focus on fundamentals and companies with business models suited to adapt to the market conditions. Central banks and governments continue to provide support to their economies and as these economies continue to open, careful analysis on how and the speed of which the support mechanisms are to be withdrawn.
We continue to actively engage with all of our fund managers and within the fixed income asset class, to monitor how they are positioned in the event that fiscal tightening is accelerated ahead of expectation. Many are positioned cautiously in companies that continue to have strong cash flows to meet their debt obligations. We remain overweight in equities favouring active managers, who have been trimming and adding to positions when opportunities arise. We also continue to remain overweight in a pool of diversified real assets, with many having inflation linked contractual payments often backed by governments, which will be useful should inflation continue to rise in the foreseeable future.
Our portfolios remain diversified across each asset class, sector and geography, and our approach has the flexibility to take advantage of the changes in the markets throughout this period.
This information is obtained from sources considered reliable, but its accuracy and completeness is not guaranteed by Anderson Strathern Asset Management Limited. Neither the information nor any opinions expressed constitute financial advice. Investments can fluctuate in price, value and/or income and may return less than the original amount invested. Past performance is not necessarily a guide to future performance. Anderson Strathern Asset Management Limited is authorised and regulated by the Financial Conduct Authority.