Goodbye 2018 Hello 2019!
For those invested for long term growth and fully invested for retirement income (Pension Drawdown) you will have probably experienced the heightened volatility in investments this year. The higher your equity content the higher your volatility.
Following circa nine years of good growth and the great growth year we had in 2017 across the world, this year could have been a shock to the system and a reminder that volatility is normal when you invest for the medium to long term.
Investment returns for this calendar year (2018) have been nominal if not a loss unless you are in a specialist or multi asset investment.
Views for 2019 vary. Some commentators (J P Morgan for example) tell us that the recession risk is rising over the next three years. Invesco Perpetual tell us that we should consider eight key risks. The highest risk being the Geo Political risk. Trump, trade wars and the political risks arising from Trump’s domestic political situation. Brexit and Europe get a mention in commentary on political risks too.
More positive views for 2019 come from Tatton and Prudential. Tatton believe we will see ongoing volatility, but the risk has been factored into equity markets at too higher level. Not all equity markets are good value though. Prudential, managers of substantial multi asset funds, also had a fairly positive view in early December. This may be because of their multi asset fund management skills and experience. Prudential do tend to take the view of long-term investors (quite rightly too).
To summarise I don’t think 2019 will be an easy year for investors but you need to remain in real growth assets to benefit from investment returns over the long term. If you are approaching the time you want to access your investment or draw pension benefits you might consider reducing your risk. This is a finely balanced decision and advice should be sought.
On a positive note 2019 sounds like it might be a better year for investments than 2018. Please note that we can experience shocks to the market and that the opinions shown above are only forecasts. The world is quite difficult to read now.
Have a Merry Christmas and a happy, healthy and prosperous New Year!