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Authorised and regulated by the UK’s FCA to provide investment accounts, we are bound by CASS rules to segregate and protect client assets.

March 2021 investment update

Our March investment update is now available to download.

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January 2020 investment update

Global equities made further gains in December, appreciating 2.9 per cent (as measured by MSCI World Index), taking their annual performance to 25.2 per cent, the best result for global equities in a decade.

Our January monthly investment update is now available to download and view online.

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10 January 2020 / Monthly investment updates

Global equities made further gains in December, appreciating 2.9 per cent (as measured by MSCI World Index), taking their annual performance to 25.2 per cent, the best result for global equities in a decade. In December, investor sentiment was boosted by the UK’s Conservative party securing a strong majority in the election, which eased some uncertainty over Brexit, as well as by signs of progress in the US-China trade negotiations (following the completion of a ‘phase one’ trade agreement).

With the UK election delivering some clarity on the political front, the focus now is not on when Brexit will happen but the type of trade deal it can negotiate before year end.

Unsurprisingly, the UK led the year-end rally in global equity markets as optimism grew that the world’s fifth largest economy would follow countries such as Japan, Korea and India in expanding fiscal stimulus to support growth. This election victory paved the way for the UK government to pass the Withdrawal Bill legislation to take the country out the European Union on 31 January 2020.

With the UK election delivering some clarity on the political front, the focus now is not on when Brexit will happen but the type of trade deal it can negotiate before year end.

Elsewhere, emerging market equities increased the most on the month, with the Brazilian index hitting record highs. However, this rally was not enough to unseat the US and China from being the best performing equity markets in 2020: the S&P 500 ended up almost 29 per cent and the CSI 300 was up 34.4 per cent.

Amid this positive end to 2020 for risk assets, as absolute return investors, our attention has been on protecting downside risk and minimising unnecessary volatility for our clients. Currently we do not have any core equity exposure, instead our focus has been on building up some of the satellite equity holdings that sit within our thematic ideas. One of our struggles in the second half of 2019 was the increasingly stretched valuations that made it harder and harder to justify global beta equity exposure. The S&P500 finished the year with a P/E ratio of 23 – there are only two ways for this to be normalised; either a stock market sell off or an incredibly strong earnings season. We are leaning towards the former in the first quarter of 2020 so remain positioned defensively to protect our clients’ assets – but would quickly re-deploy into global equities post a sell off.

Amid this positive end to 2020 for risk assets, as absolute return investors, our attention has been on protecting downside risk and minimising unnecessary volatility for our clients.

While equities had a stellar year, government bonds also delivered good returns. For example, the 10-15 year Treasury index was up 9.5 per cent (as measured by ICE BofAML 10-15 Year US Treasury Index). It seems as though the flood of central bank liquidity had lifted all boats. Such strong returns for both traditional risk-off and risk-on assets, at the same time, is unusual.  Global bonds finished December slightly lower with developed market sovereign debt losing ground during the month. Investors instead favoured the higher yields offered by emerging markets and corporate bonds.

In the US, the Federal Reserve has signaled that rates will be on hold for most of 2020. Unless something materially changes (and most likely to the downside), we support this stance. Within fixed income markets, the recent widening of treasury yields provided an opportunity to obtain some yield for portfolios. The economy continues to perform well, and the consumer remains robust, so we do not see the prospect of a recession looming just yet.

In credit, we see default rates contained and look at the attractiveness of the credit spread. Whilst high yield flirted between fair value and rich in the last quarter, we note that spreads currently remain compressed to investment grade at historically low differentials. We do not expect much change in this range of value for high yield and would be looking to remain overweight European High Yield in Q1 2020.

Across most global asset classes, the strong market performance in 2019 more than offset the losses incurred in 2018. This multi-year trend is a helpful reminder of the importance of sticking to the plan and staying strategically invested.

We believe that 2020 will be a year of two distinct halves and patience will be rewarded. After a decade of strong public market returns, now is not the time to be greedy. Strong absolute real returns are generated by managing risk appropriately, not overextending a portfolio and avoiding the downsides. In 2020 we expect moderate economic growth, subdued inflation, and the known political dynamics to be supportive for risk assets.

That said, with the Brexit trade negotiations and the US election to contend with, it is unlikely that 2020 will be plain sailing and we anticipate bouts of volatility and a continuation of several geopolitical uncertainties.  As we start the new year however, there are grounds for investors to be mildly optimistic. The global economy is stabilising as US-China trade talks are making progress. However, many risks remain.

Both the ongoing trade dispute and Brexit are far from being fully resolved, economic growth is yet to pick up convincingly and the turn of the year is often accompanied by increased market volatility, as well as tighter liquidity conditions. We thus remain underweight risk assets, awaiting a meaningful correction before allocating further to equities.

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December 2019 investment update

November was another positive month for global equity markets, writes our Head of Investment Management, Simon Black. Our December monthly investment update is now available to download and view online.

Simon Black
/ 9 December 2019

November 2019 investment update

October was a surprisingly good month but the wall of worry mounts, writes our Head of Investment Management, Simon Black. Download your copy of our November 2019 investment update and watch our briefing video to find out more.

Simon Black
/ 8 November 2019

October 2019 investment update

One of the most common questions asked in client meetings is ‘What makes Dolfin different’? Clients often feel that they want their investment manager to stand out from the crowd and to be delivering something ‘better’ than their peers.  Read more in our October monthly investment update, now available to download and view online.

Simon Black
/ 10 October 2019

Investment accounts

Dolfin’s investment accounts safeguard securities and cash, while ensuring you or your clients can take full advantage of multi-asset, multi-currency, and multi-strategy investments.

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Founded as a London-based wealth boutique in 2013, today we’re a diversified financial services firm with an international presence and our own bespoke technology platform.

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