The increasing menace of Trump-instigated trade wars is testing the mettle of even the most optimistic investors. Shares in tech bellwethers such as Netflix, Facebook and Twitter fell by 20 per cent or more following guidance on their prospects when second-quarter results were announced in July: the brutal reaction from investors clearly shows that nerves are fraying.
Among the top 10 Rated Funds for the second quarter, those with a global growth or US equity focus stood out, as well as those focused on UK smaller companies.
The dollar’s rise against sterling over the quarter helped to propel global and US-focused funds to the top of the leaderboard. It was also beneficial for the FTSE 100 index, as up to 80 per cent of earnings from the index’s constituents are sourced in dollars.
In the famous cult zombie film Night of the Living Dead and countless subsequent variants on the theme (most of them pale imitations, aside from the comedy parody Shaun of the Dead), the only way to ‘take out’ the zombie was to take out the head, one way or another. I was reminded of this visceral image after re-reading an Inside Money column from around this time last year, headlined ‘June signified a great deal more than the end of May’.
Are investors in emerging markets in for a nasty shock? The omens do not look good. Emerging market currencies are in the throes of the worst sell-off since 2015; the rising oil price and a resurgent dollar are strong headwinds against growth; Argentina’s right-wing reformist government is seeking a credit line from the International Monetary Fund (barely a year after selling global investors a 100-year bond that was more than three times oversubscribed); and the continuing threat of a US/China trade war hangs over the Asia Pacific region.
There are clear dangers for markets ahead, including the Russian bear and a mountain of debt that has built up around the world.
When markets are reeling, it can be rewarding to check the merits of actively managed funds bucking the trend.
Andrew Pitts delivers a review of Money Observer’s Rated Funds for the first quarter of 2018.
Income-seekers who want some reassurance that dividends paid by investment trusts can grow. Here's how to dig for dividend growers.
Bitcoin frenzy has echoes of the dotcom boom and indicates that euphoria is spilling over from the stock markets.