Forward Glance May 2018
The May edition of KMG's Forward Glance
May – Forward glance
Our latest Forward Glance strategy report illustrating the medium portfolio for May 2018
1st November 2011 – 28th February 2018 – gross return (since inception)
Strategy – May 2018
Volatility, which returned with a vengeance in the first quarter, persisted through much of April. Geopolitical headlines continued to play a significant role in unsettling investors, particularly prospects surrounding trade wars and the escalation of tensions between the US and the Middle East.
This marks an escalation of Trump’s campaign to put America first through protectionist measures. While regime change is an absolute certainty the rise in volatility and fall in global equity markets in the first quarter has shown once again how much equity markets tend to over react in the short term.
On a positive note, economic forecasts for the world economy have risen for this year and next, while the conditions are falling into place for a robust period of corporate profits growth. This helps explain the extent of the rise in share prices in April.
Politicians in the US, Europe and China have opened two new policy fronts, a variety of trade skirmishes and sanctions, and questions about the degree of regulation covering parts of the technology sector. Both could develop in a multiplicity of ways in coming months. Therefore, it is no surprise that recent surveys of investor confidence have indicated a less pronounced level of optimism and that capital flows have shown classic signs of risk aversion in recent weeks.
Despite more volatile times we remain comfortable with our portfolio strategies, focusing upon the long-term fundamentals and themes that continue to challenge today’s society. Technology and artificial intelligence (AI) continue to widen their reach. AI can be described as the enabling technology that sits behind robotics and other examples might be cyber security, automated driving, or automated triage for healthcare services. All these areas provide KMG with a range of investment opportunities.
The global economy is reaching a turning point in respect of the adoption of artificially intelligent systems, and the implementation of these systems within the economy will have a meaningful and substantial impact on the way in which we live our lives. They will also change the way in which we think about growth rates within the global economy and where that growth can be found.
As the global backdrop improves, further signs of the commitment of central banks globally to steadily reduce stimulus will prevail. While we see further potential volatility triggers on the horizon, we believe that solid underlying data will continue to support markets for the year ahead.
The medium portfolio offers a diverse fund range with the aim of achieving capital growth over the longer-term. The portfolio has the ability to invest in a broad range of investments on a wide geographical basis. Equity exposure within this portfolio will vary between 50% – 70%.
Contribution to performance by fund – 1 year
1st November 2017 – 30th April 2018 – gross return (six months)