Investment Trusts

F&C Investment Trust - market snapshot February 2018

The US dollar was notably weak in January, despite ongoing strength in the economy and rises in bond yields, as Treasury Secretary Steven Mnuchin suggested...
February 2018

Paul Niven

Managing Director, Portfolio Manager and Head of Portfolio Management, Multi Asset Solutions

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Risk Disclaimer

Past performance is not a guide to future performance. The value of your investments can go down as well as up, and you may not get back what you originally invested.

The US dollar was notably weak in January, despite ongoing strength in the economy and rises in bond yields, as Treasury Secretary Steven Mnuchin suggested that a weak currency was good for the US and reports emerged of China planning to reduce purchases of Treasuries.

The US equity market ended the month having posted 15 consecutive months of gains for investors – and unprecedented feat. After a very strong year in 2017, this year began with investors displaying increasing optimism over market prospects, driven by robust earnings expectations and buoyed by the prospect of US corporate tax cuts. Rising rate expectations and an associated upward drift in longer term interest rates did little to disturb equity-market progress in January.

 

Since month end, however, volatility has returned with a vengeance. Despite an apparently supportive fundamental backdrop, a disappointing print on US wage inflation was sufficient to trigger a sharp sell-off in bond markets and puncture equity markets, which fell into correction territory. We had been anticipating a rise in volatility this year, but the speed and severity has taken us, and most market participants, by surprise, with markets displaying an extraordinary turn in sentiment on the back of only a limited change in fundamental dataflow.

 

In our view, the fundamental backdrop for equity markets continues to be supportive, but the recent volatility is unlikely to dissipate immediately. With central-bank policy tightening and the bull market in equites mature, valuations are now less forgiving, and we are reliant on improvements in corporate earnings, rather than multiple expansion, to make further progress.

 

We continue to invest in a range of diversified underlying stock-selection strategies and believe that we remain well-placed to withstand any further short-term volatility in markets.

 

All information as at January 2018, unless stated otherwise

 

The Company is an investment trust and conducts its affairs so that its shares can be recommended by Financial Advisers to ordinary retail investors in accordance with the Financial Conduct Authority’s rules relating to non-mainstream investment products and intends to continue to do so.

 

The company is available for retail investors in the UK, professionally advised private clients and institutional investors who seek growth in capital and income from investment in global markets and who understand and are willing to accept the risks, and rewards, of exposure to equities.

 

 

Risk Disclaimer

Past performance is not a guide to future performance. The value of your investments can go down as well as up, and you may not get back what you originally invested.

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