Negotiating Choppy Waters


Negotiating Choppy Waters

Posted on September 28, 2018

August saw Wall Street reach new highs, emerging markets experience increasing turbulence with sharp, selective declines, and a further flattening of bond yield curves as inflation and interest rate expectations gradually edged higher. The inconsistent performances across asset classes has highlighted the value of multi asset portfolios, with their potential to diversify risk and safely negotiate ‘choppy waters’.

Hence, Alpha Beta’s approach of rigorously analyzing each asset class, by means of fundamental, technical, macro and geopolitical factors provides a framework for constructing portfolios with attractive risk and return profiles. Our UK investor-oriented higher risk portfolios significantly outperformed the FTSE 100 and the lower risk portfolios provided near equity market levels with significantly lower volatilities (see the Monthly Performance chart on the downloadable document).

Meanwhile, the continuance of the long running equity Bull market (which started back in March 2009), fuelled by a combination of quantitative easing and subsequent robust growth, particularly in the US, is coming under scrutiny in certain quarters. The US market has broken the 1990 to 2000 record of continuing days of rising prices, not interrupted by any decline of more than 20%. However, we believe it is, as often has been in the past at similar stages of economic cycles, premature to pay heed to prophets of doom. We expect late cycle growth to continue this quarter, supported by: robust earnings and economic growth. The market is currently trading on a 17 times forward earnings-multiples, which is quite full, but by no means excessive by historical standards and we do not expect a major reversal in the quarter ahead.

Download PDF to read our presentation in full.



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