with Funds SA Chief Investment Officer - Richard Friend
March 2018 Overview
Key drivers of performance during the month included:
- Ongoing trade tensions weighed on market sentiment, causing risk assets such as equities to fall while fixed interest performed strongly.
- This environment proved to be favourable for portfolios with relatively larger allocations to unlisted assets and fixed interest.
Key factors impacting financial market performance during the month were:
- Ongoing trade tensions between the United States and the rest of the world provided a focal point of investor attention, weighing on risk assets such as equities.
- On March 1, the US announced tariffs on several foreign goods, which lead to China and the European Union imposing tariffs on US goods in retaliation.
- Concerns of an escalation of this ‘tit for tat’ behaviour permeated through risk assets, with trade exposed countries and sectors bearing the brunt of the falls.
- This included commodity linked markets such as Australia and various emerging markets.
- Global government bond markets produced positive returns, with bond yields falling in response to heightened uncertainty emanating from global trade tensions.
- Non-government bonds and emerging market debt underperformed government bonds as the excess returns that investors demand for bearing the additional risk expanded meaningfully.
- Currency markets responded to similar themes to risk assets over the month.
- Global trade tensions saw the Australian dollar fall,while the US dollar was mixed and ended the month largely unchanged.