The challenging investment environment continues this month

Although the past month presented some bright spots and positive uplift in markets, these upward moves were often short-lived.

In terms of market performance, H1’22 has been the worst start to a calendar year for decades. The chart below shows both equity and bond market index performance for H1’22.

Inflation concerns, rising interest rates, removal of Central Bank stimulus measures, the energy crisis, geopolitical events and recessionary risks are all factors weighing on investment sentiment. The rising cost of energy is a material issue, particularly for Europe.

Although unlikely in the short-term, any positive development between Russia/Ukraine would ease the pressure on energy commodity prices, which in turn would start to alleviate the strain on other risk factors. The near-term outlook remains uncertain and therefore the Investment Committee consider it appropriate to maintain maximum portfolio diversification. For our discretionary clients, the Investment Team implemented some small changes to investment strategies during June. We took the opportunity to modestly decrease UK mid-cap equity exposure in favour of income-focused UK equity positions. These changes have increased portfolio diversification and will act as a natural near-term hedge against rising inflation and recessionary risks.

As you are aware, all of Nugenis’ investment strategies are designed with a medium-to-long term investment horizon. We define medium-term as a period greater than 3-years. With this in mind, the Investment Committee continue to consider it appropriate to remain fully invested and position portfolios accordingly. Current market conditions will not last forever and positive performance will be resumed. The opportunities created by near-term market volatility allow us to position investment strategies to generate stronger portfolio returns in the future. If you have any questions, please speak to your Financial Planner.