While there were plenty of opportunities for markets to hit a rough patch last year – not least because of the UK’s ongoing negotiations to depart from the European Union (EU) and the nuclear tension between the US and North Korea – equities have just gone through a relatively strong period.
Emerging markets funds, especially those focusing on China, topped the charts followed hot on their heels in second place by UK smaller companies funds (despite uncertainty around the Brexit process and the UK economy) and European Smaller Companies funds generating some of the best returns in 2017.
Of course, you might wish more of your investment had been placed in the areas that have performed best, but I prefer to recommend maintaining a well diversified portfolio that isn’t too focused on identifying future winners and losers but one that balances risk with opportunities.
Although I do not encourage short-termism, the constantly changing global economic environment does offer potential to capitalise on tactical opportunities, but investors need to tap into a proactive approach to investment management in order to benefit from those opportunities. The days of being able to place your savings or pension fund in an investment and sit on it for years without adjusting or rebalancing are long gone if you want to maximise opportunities for good returns and/or maintaining income.
Source: FE Analytics
So what is the Outlook for 2018?
Mystic Meg can play no part in this and anyone’s ability to predict what 2018 may hold in store for us would no doubt be thrown off course by some unexpected Geo-political event unfolding. However, there are a few economic indicators that can assist with our planning and expectations.
Interest rates are expected to remain low, which means that investments held in cash or in bonds can expect continued low returns. This will boost demand for equity investments, offering the potential for a good year for those thinking of moving away from cash and for those already invested in the stock market.
The US economy is growing well, even without tax cuts or big spending on infrastructure. European markets continue to look attractive in relation to their more expensive US counterparts, yet remain home to many world-leading businesses and brands. The global financial system looks to have been substantially de-risked, with strides forward in terms of bank regulation and the putting in place of contingencies for adverse economic events. Closer to home the Bank of England still thinks inflation will fall from current levels.
So there’s no fundamental reason why a change of year should have an impact on markets, but psychology sometimes seems to dictate otherwise. The present lack of investor fear suggests that stock markets may be vulnerable to unforeseen shocks. However, financial markets have been resilient to geopolitical shocks in 2017. Equities have been performing well and for good reason – rising corporate profits, very low interest rates and the continuing attractiveness of stock dividends in relation to low government bond yields. Global economic growth should remain strong in 2018, as both advanced and emerging economies enjoy a synchronized upturn.
Speed Financial Solutions are a highly qualified financial services provider on the Costa del Sol looking after clients throughout Spain and the UK. We provide a discreet and comprehensive service to individuals, our service is tailored to your needs taking advantage of tactical opportunities as they arise in respect of your investment planning. We seek innovative solutions for our clients and employ our skills, based on many years of experience, to apply tax legislation to our clients’ advantage. Our relationship with clients is built on trust and mutual respect. We are accessible and approachable, and ready to answer your questions, giving you the confidence you want when dealing with a sensitive issue such as discussing your pensions, investments and savings.
Our Principal, Andrea Speed, is a Fellow of the Personal Finance Society (PFS) which is the professional body for the financial planning community. The PFS is part of the Chartered Insurance Institute (CII), which is the world’s largest professional body for insurance and financial services in the world.
Fellowship is the highest qualification awarded by the CII and is universally regarded as the premier qualification. It is a major achievement in the financial industry and demonstrates the acquisition of skills and knowledge at the highest of levels.
Along with a Fellowship, Andrea is a CII Chartered Financial Planner specialising in Taxation and Trusts.
Please take a look at our website – www.speedfinancialsolutions.com for further information and contact us (Tel 951 315 271 or 951 318 529) – we are happy to discuss your own situation in more detail. One of our advisers would be pleased to spend some time with you either in your home or at our office to review your current savings, investments and pensions, so do call to make an appointment. Our Financial Review is completely free of charge and without obligation. Follow us on Facebook for regular updates.
Andrea J Speed FPFS (DM), M.A.
Principal, Fellow and Chartered Financial Planner
Speed Financial Solutions
8 January 2018
Please note that the above does not constitute advice to invest – you should seek independent financial advice before investing.