Fiducia Wealth Management
Posted in Investing, Tax Planning on 02.10.13

Elsewhere, bonds, both conventional and index linked, delivered miserly returns that scarcely made it into positive territory. In the alternatives arena, property, infrastructure, private equity and absolute return all achieved healthy numbers, although commodities, on average, endured yet another quarter of hardship to compound the losses realised in Q2.

Asset Class Returns Q3 2013In July investors were buoyed by data from the corporate world seeming to suggest that quarter two earnings had met, or indeed exceeded, analyst expectations, a point that took on particular prominence within the financial sector as some banks recorded a 40% return on capital. The upbeat tone was fortified further by comments from the Chairman of the US Federal Reserve, Ben Bernanke, who echoed his previous rhetoric that QE tapering would not be initiated until unemployment fell below the 6.5% target rate, although it was noted that this would be kept under close scrutiny.

As markets progressed into August, the traditional summer lull in trading activity ensured market volume was significantly lower than usual. On the economic front, there were few new developments to pre-occupy investor mindsets, with the ongoing concerns in Europe continuing to remain firmly on the sidelines as German elections loomed. No further clarification was given with regard to the possible curtailment of US QE, despite growing conjecture that the Fed was, privately, giving greater consideration to stopping, or at least reducing, the printing presses. Such growing rumour triggered a slight normalisation in bond yields, in addition to a sell-off of emerging market currencies to the extent that locally denominated bonds in these emerging regions suffered heavy losses.

The initial attention in September centred on Asia, as early in the month China reported forecast-beating export figures and Japan posted second quarter GDP growth well in excess of even the most optimistic projections. The Asian revival boosted investor risk appetite, as did the significant news that came a little later in the month that the US Federal Reserve were maintaining asset purchases at $85 billion per month, surprising markets who had anticipated a slight reduction to around the $70 billion level. In light of Asian positivity and the maintenance of QE, it was of little surprise that major equity markets rallied, taking many to levels not seen for several months.

For the remainder of 2013, our outlook is one of cautious optimism although we are conscious of the risks that remain. Economic data from many developed nations is continuing to improve, overall, as are the fundamentals in emerging markets, irrespective of the recent sell off. Thus, there are grounds for a more bullish outlook. However, bond market normalisation could jeopardise sustained recovery if yields rise sharply, while the European situation, despite not making headline news, is still not resolved definitively. Although the US has signalled its intent to maintain asset purchases for the time being, there will come a point when it is no longer prepared to inject such large amounts of liquidity to prop up the system. When this stimulus-free environment commences, the exact impact that it will have is uncertain.

If you would like to know more about how we as Financial Advisers can help you  with your Investments then visit the Investment Management section of  our website: Investment Management or send us email at: [email protected]

The information contained in our website is for guidance only and does not constitute advice which should be sought before taking any action. The information is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly, no responsibility can be assumed by Fiducia Wealth Management Limited, or any associated companies or persons, its officers or its employees, for any loss occurred in connection with the content hereof and any such action. Professional financial advice is recommended for every case.

Fiducia is a multi award-winning firm of Financial Advisers based in Dedham near Colchester situated in the heart of Constable Country on the Essex Suffolk border.

Fiducia Wealth Management Ltd. Dedham Hall Business Centre, Brook Street, Dedham, Colchester, Essex, CO7 6AD.

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Fiducia Wealth Management
Posted in Investing, Tax Planning on 02.10.13