Tag: Investment

market insights

Financial Markets

Financial Market Insight Month in Review – August 2021


Markets have continued to edge upwards over recent weeks while investors remain on high alert for Central Bank signals that the process of unwinding the QE supports which have been in place for a number of years is about to begin. Central bankers are well aware of this state of alert and are being very careful not to make any statements which might hurt financial markets and potentially negatively impact the nascent post covid economic recovery. Following the annual Jackson Hole meeting of central bankers in Wyoming last week, where Jay Powell the Federal Reserve Chairman indicated that they could start tapering their bond buying before the end of the year but that rate rises were some way off, markets took this in their stride, at least for now.

Elsewhere, China continues to heap regulatory pressure on to the big domestic internet players, the most obvious outcome being a 25% fall in the Hang Seng Tech Index year to date. In comparison, non-internet companies are down by around 3%. Many commentators see the tech sector fallback as overdone (annual revenue growth for some of these companies is still of the order of 40%) and see it as a buying opportunity, which it could be but probably not for the faint hearted.

As vaccination rates have increased across developed markets, investors have become increasingly comfortable around the longer-term impact of the pandemic and even seem happy to ignore the potential risks around the emergence of new variants. Some analysts have gone as far as projecting double digit annual returns for the next five years which appears excessive to say the least and may well be an indicator that a market downturn is not far off.

financial market

Equity Markets

As major equity markets continued to grow through August, by the order of 2% on average, China remained the outlier, falling in value by around 1% over the month. We continue to hold the view that any market setbacks between now and the end of the year will be short lived as opportunistic money flows into equities to provide support in the event of markets falling back. We are holding to our view that equity markets will finish the year higher than they are today.

financial market

Bonds

The statement from the US Federal Reserve Chairman that purchases of bonds under their QE programme will likely tart winding down by the end of the year is not ideal news for bond markets. While a sharp correction is not likely, it is somewhat inevitable that many bond prices will slide between now and year end and that yields will gradually rise. So not a perfect time to be increasing exposure to mainstream bond markets. However, we do not expect large market shifts and we still see good value in niche areas of the bond universe.

Cash

No change in outlook here as negative rates look to be embedded in the banking system for quite some time yet, despite the subtle shifts in bond markets. Long term cash holders are strongly encouraged to consider some of the high yielding lower volatility investment funds available in the market.

Alternatives

For those concerned about the risk in mainstream equity markets from high valuations, it might be worth considering alternative assets. Sectors worth considering might include Private Equity and Infrastructure, both of which are benefitting from favourable environments currently. Example funds include Standard Life Private Equity Trust (trading at a 20% discount to NAV and paying an annual dividend yield of 3%) and GCP Infrastructure (annual dividend yield 6.5%). With current warnings about power shortages in Europe this winter, the renewable energy providers will directly benefit. Example funds include NextEnergy Solar (annual yield 7%) and Greencoat (annual yield 5%).

Investment Outlook

The post covid optimism around economic recovery continues to be the dominant influence driving equity markets. In general, we would see this mood continuing between now and the end of the year, peppered by occasional volatile phases. Longer term, equities will continue to deliver, although as markets continue to rise, a selective approach is likely to produce the best outcome.

Fund in Focus

Our fund for this month is Aberdeen Asian Income Fund  –  Click here to see more details

As always, you should only consider the investment views contained in this Financial Market Insight update in the context of your own attitude to risk and how such choices might impact your Asset Allocation model. Should you wish to discuss your investment portfolio, please contact Harvest Financial Services on 01 2375500 or email justask@harvestfinancial.ie.

market insights

Market Insights Monthly Bulletin – July 2021

Month in Review

As we hit mid-Summer, Markets are well into their standard seasonal quiet phase at this point. Many market participants are on vacation, the public institutions are typically quiet and there is little happening in terms of company results and announcements. As a result, markets have a habit of drifting sideways for a period at this time of year and this is certainly the general pattern in markets at the moment. That said, it’s not all quiet on the Western front, or the Eastern front for that matter. A regulatory crackdown by the Chinese Government on the larger Chinese tech companies has spooked many overseas investors and caused share prices to fall in China. As is often the case with policy changes in China, this move appears to be driven by multiple reasons including reinforcing Central Governments grip on the money supply, encouraging overseas investment by Chinese citizens, and stimulating a greater work ethic amongst Chinese youth who have become less enthusiastic about signing up to low paid high stress career opportunities.

Elsewhere, markets continue to be on high alert for Central Bank signals as to when QE might be eased and interest rates may rise, particularly in the US and UK. In addition, Covid optimism is on the up as case numbers fall in the UK and a number of other countries. And finally, the $1 trillion infrastructure bill being promoted by President Biden was finally passed this week. While its immediate impact may be relatively muted because of its long-term nature, it will certainly lead to attractive investment opportunities for infrastructure funds and underpins our view that there is a place in every portfolio for infrastructure exposure.

Equity Markets

The impact of the move by Chinese authorities referred to above can be clearly seen in the performance of its equity market which fell by more than 10% during July. In contrast both Europe and the US were up by almost 2% over the month. On a one-year view, the major markets have all returned more than 30% but again China is the exception, delivering less than 10% in euro terms over the 12-month time frame. While activity levels are likely to remain muted in August, the momentum in equity markets between now and the end of the year is expected to be generally supportive for markets, helped by better company results as the grand reopening continues.

Equity Market Performances (in euro terms)

MarketPerformance July 2021*Performance 1 year*YTD*
Ireland0.4%38.1%13.7%
UK-0.2%30.2%16.5%
Japan-3.3%20.7%-2.9%
Europe1.7%33.1%18.7%
US1.9%36.1%21.7%
China-10.9%9.5%-2.2%

*Source Financial Times, Financial Express

Bonds

Bonds generally strengthened over the month as inflationary concerns receded, at least temporarily. A relatively flat bond market is likely to be the order of the day, possibly for several months at least. The triggers to alter this course will almost certainly be signals from the authorities to raise interest rates and/or ease up on QE supports. So, while there are still niche parts of the bond market offering attractive yields, the mainstream is unlikely to provide any excitement for a while yet.

Cash

So far with the exception of smaller personal deposits, negative interest rates are gradually being applied across the board within the Irish banking system. Pension funds and retirement funds will need to adjust to this new phenomenon which we would expect to persist for quite some time. Those holding longer term cash in their funds should certainly be exploring other options. For example, the Harvest cash Alternative Strategy (a mix of three funds) has returned 2.9% year to date compared with a negative return from cash.

Infrastructure

The world needs infrastructure investment. The US in particular has underinvested significantly in infrastructure in recent decades to which US road user can attest. And apart from basic physical works, the green agenda will demand very substantial infrastructure, particularly in the area of alternative energy sources. Added to this, most developed country governments have identified infrastructure as a key area to be focused on in the regeneration of economies post Covid. These initiatives should provide some very significant opportunities for infrastructure funds over the coming decade, and we are recommending all pension clients consider adding an infrastructure fund to their portfolios. One of our key selections in this space is described below.

Investment Outlook

We expect the post covid momentum to continue to act as a tailwind for equity markets over the coming months so the general mood should remain positive. On the other hand, equity valuations are certainly quite stretched in comparison with historical norms and markets will certainly be vulnerable to bad news. However, when considering equity valuations, we do need to be conscious of both the negative interest rate environment and the very low returns currently on offer from other asset classes.

Fund in Focus

Our fund for this month is –First Sentier Global Listed Infrastructure –  Click here to see more details

As always, you should only consider the investment views contained in this Market Insights update in the context of your own attitude to risk and how such choices might impact your Asset Allocation model. Should you wish to discuss your investment portfolio, please contact Harvest Financial Services on 01 2375500 or email justask@harvestfinancial.ie.

where to invest

Funds in Focus – Where to invest?

Fund in Focus – Aberdeen Asian Income Fund

August 2021

This month’s fund in focus is the Aberdeen Asian Income Fund. Having emerging markets exposure in your investment portfolio is becoming increasingly important as Asia continues to deliver growth well above the world average. While Covid inevitably impacted over the past eighteen months, all the evidence would suggest that Asia is coming out of the blocks quickly post the pandemic. As a result the outlook remains positive.


The US – China geopolitical tensions will result in China becoming more self – sufficient over the coming years. In addition, other countries such as Vietnam and India are benefitting from the ongoing relocation of basic industries away from China to lower cost economies. The investment opportunities presented by these trends are captured by the active management style of this fund. The fund is well diversified across many sectors including domestic consumption, technology and green energy. However as an income focused fund, its exposure to some of the very high growth sectors is limited and it will tend to underperform the market during strong growth phases. On the other hand its volatility is two thirds of the market and it will tend to underperform during volatile phases. A particularly attractive feature is the high dividend yield. The current annual yield is 4% which is paid out to investors quarterly. This may be of particular interest to ARF investors who are looking to generate income from their investment portfolio.

If you would like to discuss this fund or look at other income opportunities, please contact your Client Advisor or contact us on 01 2375500. Investment in this fund will allow you to gain a liquid and diversified exposure to Emerging Markets, managed by a specialist, well recognised investment manager, while also delivering a steady income.

Fund in Focus – First Sentier Global Listed Infrastructure

July 2021

Following the passing of the $1 trillion Biden Infrastructure Bill in the US this week, our monthly fund in focus is the first Sentier Global Listed Infrastructure Fund. Biden’s plan is the most substantial expenditure on the nation’s roads, bridges, waterworks, broadband and the electric grid in decades. We can also assume that this plan will pave the way for global governments as it highlights the importance of strong and stable infrastructure for economies.

  • Listed infrastructure provides essential services to society, making it less sensitive to the economic cycle.
  • The fund invests in a variety of different types of infrastructure assets globally giving a good geographic and sector spread.
  • Growth is being driven by long term structural themes such as the build-out of renewable energy, the need
    to ease urban congestion and increasing reliance on mobile data.
  • Investment in infrastructure is key when creating a well-balanced investment portfolio as these types of investments have tended to be less volatile than other equity classes.
  • Infrastructure can be used as a lower volatility complement to global equities.

Fund in Focus – Guardcap Global Equity Fund

June 2021

For our monthly Fund in Focus we are highlighting the Guardcap Global Equity Fund. This a high conviction equity fund which targets companies with strong positions in growing niche markets, while generally avoiding the big names The philosophy of the fund is that long term sustained growth drives returns.

  • The fund includes a very select, thoroughly researched concentrated portfolio of quality companies (20-25) selected based on their track record and potential of delivering sustainable capital growth with great diversification across various sectors and regions.
  • Each company having significantly better quality and growth characteristics than the market average, and each being undervalued in relation to its long-term future earnings and cash flows at the time of purchase.
  • The fund managers follow a rigorous process where a large pool of stocks is reduced to those which best fulfil such criteria as sustainable competitive advantage over other similar companies, excellent management and a strong financial history and outlook.
  • Income and capital gains from the Fund are reinvested.
  • The fund provides a scale of opportunity for investors and would be considered a core global equity holding in a portfolio for both personal and pension investors.
Where to Invest

Fund in Focus – Blackrock World Mining Trust

May 2021

For our monthly Fund in Focus we are highlighting the Blackrock World Mining Trust. This fund is designed for investors who seek income and growth and intend to invest for five years or longer.

The mining and commodities sector is benefiting from the world’s most compelling long-term trends from digital transformation, to the sustainability agenda, to gold and precious metals. Targeting income and capital growth, the Trust provides a diversified blend of companies designed to benefit from the changing global economy.

  • > The trust provides exposure to the global hard commodities market
  • > It is very well diversified across a wide range of commodities.
  • > Net dividend yield target of 3.5% per annum.
  • > Managed by one of the largest global asset managers.

This investment would be suited to investors looking for a specialist commodities trust to provide long-term diversification of income and capital, geared to the changing dynamics of the global economy.

Rathbones Ethical Bond Fund – April 2021

For our monthly Fund in Focus section we have selected a component fund of our ESG Investment Strategy – the Rathbones Ethical Bond Fund. This fund aims to deliver both income and growth on a consistent basis to its investors. The fund also applies strict ESG criteria to the bonds it purchases focuses solely on bonds issued by companies who measure up to the required standards.  Thirdly, the Fund aims to deliver a greater total return than its benchmark, the Investment Association (IA) Sterling Corporate Bond sector over any rolling five-year period. The fund has been successful on all three counts and has consistently outperformed its benchmark over the past ten years.

  • The fund is a traditional socially responsible investment fund.
  • Experience of managing ethically screened private-client investment business.
  • Engagement, governance, and stewardship managed by a central governance committee.
  • Open and transparent ethical criteria and reporting lines.
  • The fund targets an investment grade high yield with a strong ethical overlay.
  • Quarterly pay-out of income.

To make sure that investments are suitable, the fund manager has access to Rathbones’ dedicated ethical, sustainable and impact research team.  Together, this actively managed fund applies ethical screens to assess potential investments; having confidence that long-term growth can be achieved by companies which conduct their business and apply capital responsibly.

where to invest

The fund has been a consistent outperformer over the past few years but particularly so over the past year. The fund offers a very broad global exposure to the ESG opportunity and is a very appropriate core bond holding in client pension and investment portfolios.

Schroder Sustainable Growth Fund – March 2021

For our monthly Fund in Focus we have highlighted one of the funds in our ESG Investment Strategy. The Schroder Sustainable Growth Fund aims to provide capital growth by investing in equities of companies worldwide which meet the investment manager’s sustainability criteria which include the following:

  • managing the business for the long-term
  • recognising the company’s responsibilities to its customers, employees, and suppliers
  • respecting the environment

In addition, the investment manager believes that when aligned with other drivers of growth, this can result in earnings stronger growth which is often under appreciated by the market. Issues such as climate change, environmental performance, labour standards, or board composition that could impact a company’s value will be considered in the assessment of companies.

where to invest
Source Financial Express

The fund has been a consistent outperformer over the past few years but particularly so over the past year. The fund offers a very broad global exposure to the ESG opportunity and should be a core equity holding in client pension and investment portfolios

2X Midcap Library Fund – Feb 2021

The 2X Ideas Midcap Library fund is a Swiss based actively managed global equity fund which targets companies with valuations between US$2 – 30 billion. The management style is highly research driven, seeking out companies around the globe with very strong positions in their own market niches and with the potential to deliver growth well above the average over the long term, largely independent of economic cycles. While none of the 100 companies held by the fund could be regarded as small companies, the majority are not household names with the result that the investor is being given an exposure to growth opportunities not commonly found in other global equity funds. The investment approach taken by the fund has proven itself against the market over the last number of years. *2xideas vs MSCI World Perf. 1- year graph

Source Financial Express

NextEnergy Solar Fund Limited

December 2020

  • UK’s largest solar farm operator
  • 90 separate acquisitions of solar projects
  • Market capitalisation £630 million
  • Annual dividend yield c.6% (paid quarterly)
  • Gross return of 45% over past 5 years

‘Every hour the world receives enough energy from the sun to power the entire planet for a year’.

Background

NextEnergy Solar Fund Limited (NESF) is a solar infrastructure investment company primarily focused on the UK. As at 30 September 2020 the Company has completed 90 separate acquisitions of solar projects with total capacity installed of 755MW and total invested capital of approximately £950m. The company’s solar farms are almost all UK-based although it does own a small number of installations in Southern Italy and is seeking further opportunities outside of the UK. The Company has an investment limit of up to 30% of the Company’s gross asset value (GAV) in solar assets outside the UK. Currently, the non-UK investment represents 12% of GAV.

Investment Strategy

NESF’s investment objective is to provide ordinary shareholders with attractive risk adjusted returns, principally in the form of regular dividends, by investing in a diversified portfolio of primarily UK-based solar energy infrastructure assets. As a result, returns to shareholders are primarily in the form of annual dividends rather than capital growth. Based on its current profile of investments, we the income is secured for a long time to come. The company should also be a beneficiary of the UK Governments new ‘Ten Point Plan for a Green Industrial Revolution’ The company’s shares are listed on the London Stock Exchange and are freely tradeable.

ESG

NESF invests with a view to holding its solar assets until the end of their useful life. NESF are committed to all ESG (Environmental, Social and Governance) principles and responsible investment. They are on a mission to generate a more sustainable future by leading the transition to using more clean energy. They believe that solar is the key technology for the transition away from fossil fuels towards a greener economy. By generating clean energy, NESF avoid 307,500 tonnes of CO2 emissions per annum while powering homes sustainably. Their ESG policy re-enhances their commitment to tackling climate change. You can read further into NESF’s ESG policy online at www.nextenergysolarfund.com/esg

Historic Performance

*Source – Financial Express


Guardcap Global Equity Strategy

August 2020

Fund Size                            €1.46 billion

AMC                                      0.8%

Trading Currency               Euro

Liquidity                             Daily

Income                                 No

For this Fund in Focus, we have selected the Guardcap Global Equity Strategy, which has been a longstanding core pick for our clients looking to gain exposure to global equities. This fund is a concentrated, bottom-up strategy, managed by GuardCap Asset  Management, a specialist firm located in London,  which is part of the Guardian Capital Group. The GuardCap Global Equity team is distinguished by its highly focused long-term thinking, which enables its strategies to harness a sustained long term outperformance against global equity markets.

The fund seeks to invest in companies with strong balance sheets and who offer the genuine prospect of delivering long term growth. For Guardcap’ managers, very few companies meet their  exacting criteria. This no compromise attitude towards stock picking is backed by a highly rigorous and detailed investment process, with in-depth written reports and models prepared on each company considered for inclusion. The net result is a highly concentrated strategy offering unique exposure to the potential arising from sustainable, long-term growth companies. Most importantly, it has been a consistent outperformer over a long period. The fund size is €1.46 billion and holds c.25 stocks.

Geographic and Sectoral Exposures

where to invest my pension fund
Source Financial Express
Where to invest my pension fund
Source – Financial Express

Historic Performance

The fund has been a consistent outperformer over a sustained period and while the price fell sharply in March 2020 along with equity assets across the globe, it recovered very quickly and ahead of world markets.

Where to invest my pension fund
Source Financial Express

Updated – August 2020

market insights

Market Insights June

Market Insight Month in Review

Inflation is simply the story that won’t go away. Despite the official line emanating from Central Banks that the evidence of upward price and wage pressures which has recently come to light, particularly in the US, will be a transitory phenomenon, a growing number of market participants are not so sure. The doubters are still in minority and the prevailing view continues to mirror the official line from the Central Banks. However, there is an abundance of factors feeding the opposite view. Among them are the continuing rise in oil prices, the spike in US house prices in recent months, the acute shortage of shipping containers influencing sharp rises in transport costs, the long waits being experienced for new car purchases (due to parts shortages) and so on. Ironically, of course Governments are one of the primary beneficiaries of inflation as it reduces the value of their debt in real terms and with the growth of Government debt across the world in recent years, a small dose of inflation might be quietly welcomed.

For investors, the concern is if or when the weight of doubters reaches critical mass as this is likely to trigger a market correction. While the past month has been positive overall for both bond and equity markets, the Summer months (traditionally never seen as a positive period for markets at the best of times) could be quite bumpy because of the ebb and flow of inflation worries combined with scope for significant disappointments in relation to the relaxing of Covid restrictions.

Longer term we continue to see value in risk assets and in equity markets in particular.

Market Insights June Equiity

Equity Markets

The past month was a generally positive one for stock markets, with the US (ahead by almost 6% in euro terms) once again leading the charge. For the moment at least, the post covid recovery story is winning out over inflation worries or any potential setbacks arising from the spread of new variants. As far as the latter is concerned, there is growing acceptance that while the vaccines may not be completely effective against the new variants, they do seem to result in much milder symptoms and far fewer hospitalisations. As a result, they may delay but unlikely to reverse the reopening of economies. Economic growth is now projected to be strong in most of the major economies in 2021 and 2022 and equity markets should continue to reap benefits from the improving outlook.

Equity Market Performances (in euro terms)

MarketPerformance June 2021*Performance 1 year*YTD*
Ireland-1.3%38.5%11.7%
UK0.2%24.9%15.6%
Japan1.7%18.9%1.2%
Europe1.4%29.4%16.1%
US5.7%33.3%18.9%
China1.1%22.9%9.7%

*Source Financial Times , Financial Express

Bonds

The expectation that the Federal Reserve in the US would begin to raise interest rates sooner than had previously been signalled led to a spike in 10-year treasury yields. This has now been reversed and yields have fallen back. However, the event does point up the vulnerability of the bond market. The current consensus view on interest rate trends is a very benign one and bond prices are trading at all-time highs reflecting that view. As a result, it is hard to avoid the conclusion that, for longer term sovereign bonds as well as for high yield corporate bonds, there is material downside risk over the next year.

Cash

Holding large reserves of cash is becoming an expensive option these days as banks seek to apply negative rates to a wider range of accounts. For those not seeing a need for their cash over the next three years, there are certainly a number of lower risk alternatives which should be seriously examined. If you wish to look into these options in more detail, you should contact your Client Adviser in Harvest for further information in relation to your options.

Private Equity

While investing directly into unlisted companies can bring a significant degree of risk, accessing private equity via large liquid diversified funds can be a very attractive prospect for pension investors. The backdrop for the larger private equity funds is very positive at this point in the cycle. Debt costs are historically low, company growth prospects are improving post Covid while there are considerable investment opportunities in a number of out of favour sectors.

Investment Outlook

Covid and inflation related uncertainties will undoubtedly lead to bouts of volatility in equity markets over the coming months. On the other hand, the emergence of countries from restrictions provides plenty of opportunity for companies exposed directly or indirectly to consumer markets to enter a period of strong growth. This trend will have a strong underpinning effect on markets, and we would still expect markets generally to finish ahead of where they are now at the end of the year.

Fund in Focus

Our fund for this month is –– Guardcap Global Equity Fund–  Click here to see more details

As always, you should only consider the investment views contained in this Market Insights update in the context of your own attitude to risk and how such choices might impact your Asset Allocation model. Should you wish to discuss your investment portfolio, please contact Harvest Financial Services on 01 2375500 or email justask@harvestfinancial.ie.

market insights

Market Insights May

Month in Review

Once again, inflation is the headline grabbing theme for markets over the past month. Figures published over recent days in the US showed that prices for retail goods (excluding food and energy) rose by their highest year on year level since the 1990s. So far, markets are taking such developments in their stride, clearly accepting the line that the Federal Reserve will tolerate a certain amount of inflation and will hold the line on interest rate rises for a while yet. Should such trends continue over the coming months however, that acceptance is unlikely to last and we are likely to see enhanced volatility in equity and bond markets.

Another phenomenon which has re-emerged in recent weeks is that of retail investor power. We witnessed this back in January of this year when an army of small investors drove the share price of Gamestop to extraordinary highs. Once again Reddit is the platform being used to co-ordinate a number of plays on out of favour companies. The share price of AMC for example, the entertainment company, has risen by some 150% over the past month as a result. Whether this phenomenon reflects a fundamental shift in the behaviour of small investors longer term or whether it is a side effect of a fully priced equity market which will ultimately end in tears, remains to be seen.

Both Big Tech and cryptocurrencies are currently suffering as a result of ongoing talk of increased regulation. Globally coordinated higher taxes and increased regulation are now a virtual certainty for the larger tech players. Similarly, if Bitcoin or any of the other cryptocurrencies are going to be around for the long term, regulation inevitable.

Major Equity Markets Year to Date (in euro terms)

This image has an empty alt attribute; its file name is major-equity-market-insights-may-2021.jpg

* Source Financial Express

Equity Markets

Outside of Europe, which rose by almost 3% over the past month, equity markets were relatively flat over the past month in euro terms. Year to date, the MSCI World has risen by 12% and the US, UK and Continental Europe have all grown by double digits over this period. China, Japan and emerging markets generally have all lagged this trend. In our view, emerging markets are offering some of the best value opportunities at present. We see Asia as continuing to be a major engine for global growth, particularly so in a post Covid world and we strongly recommend that all clients carry some exposure to the emerging markets theme in their portfolios. Our featured fund this month, the Martin Currie Global Emerging Markets Fund is our current top pick in this space.

Equity Market Performances (in euro terms)

Market Performance May 2021* Performance 1 year* YTD*
Ireland +2.4% +42.4% +13.2%
UK +2.4% +25.1% +15.1%
Japan -1.5% +18.2% -0.2%
Europe +3.5% +32.7% +14.3%
US -0.5% +28.1% +13.1%
China +0.3% +29.0% +7.5%

*Source Financial Times , Financial Express

Bonds

Following the inflation-inspired jump in bond yields (and fall in prices) earlier in the year, bond markets have held relatively steady and yields have even moved down a little. We see sovereign bonds as continuing to offer very little to retail investors., a situation that’s likely to persist for quite some time yet. However, there are some bond market niches where value and income are still available. A number of funds specialising in these niches offer a genuine longer-term alternative to cash deposits and the income aspect is especially attractive to post retirement clients seeking an annual cash flow to help fund drawdowns.

Cash

As more banks apply negative interest rates to a growing range of accounts, holders of cash deposits are beginning to feel real pain, especially with negative rates as high as minus 1% per annum. We really don’t see this scenario changing for quite a long time. We are strongly advising clients to consider alternatives where the requirement for cash availability is beyond three years.

Technology

While Big Tech is currently in the spotlight with regulators and tax legislators, the rate of advance in several specialist areas of technology continues apace. In our view, a number of these areas will deliver strong growth over the coming decade to the benefit of those investors with an exposure. Areas of interest include Robotics, AI, Cloud Computing and Cybersecurity amongst others. While it will be challenging to pick company winners within these subsectors it is relatively straightforward to gain a broad exposure via dedicated exchange traded funds.

Investments Outlook

Stretched valuations and a sufficient number of nervous investors will ensure that volatility will continue to feature over the course of 2021. However, there is growing optimism around the opening of economies and the rush of consumer spending which might accompany the opening, this continues to support markets. On balance while we are cautious, we remain optimistic and our overall sense is that equity markets will continue to move forward between now and the end of the year.

Fund in Focus

Our fund for this month is – Martin Currie Global Emerging Markets Fund. Click here to see more details

As always, you should only consider the investment views contained in this Market Insights update in the context of your own attitude to risk and how such choices might impact your Asset Allocation model. Should you wish to discuss your investment portfolio, please contact Harvest Financial Services on 01 2375500 or email justask@harvestfinancial.ie.

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Tel: +353 (0) 1 237 5500, Fax: +353 (0) 1 237 5555. Email: justask@harvestfinancial.ie