After some remarkable ups and downs in 2018, asset prices have come back to earth and global growth is now firmly in low gear. The US Federal Reserve’s quantitative easing (QE) withdrawal with four interest rate hikes last year made an impact across the board from widening corporate bonds to battered emerging market currencies and we expect this and the reaction to other central banks’ tightening to provide a headwind for the wider markets in Q1 of 2019.
As 2018 winds down, we are faced with the fact that Brexit and the cloudy uncertainties it poses on UK businesses and investors continues to drag on. Although it is difficult to predict what will happen given the range of outcomes and indeed the range of forecasts on the impacts of those outcomes, we at Canada Life Investments in London feel it is important to communicate a brief analysis of it as we move into 2019.
Markets took a downward turn in October as the impact of the global monetary tightening cycle, excessive valuations within some asset classes, political uncertainty and issues across emerging market currencies turned sentiment sour. However, we believe this was a sensible correction, not the first leg down in a long-term bear market.
The growth of passive investing is widely discussed by equity market investors, but less so in fixed income. This is because there are a number of differences between equity and bond indices that need to be taken into consideration when analysing the active versus passive debate, which we believe supports the case for active management.
The LF Canlife Sterling Liquidity Fund is designed to provide institutional investors with a high degree of capital security and daily liquidity via a conservative, but flexible approach to cash and fixed income investing. Launched in July last year and AAAf/S1 rated by Fitch, we believe the Fund offers diversification versus bank deposits combined with high levels of liquidity and credit quality.