The bounce in US small caps which has excited the stale bulls. Much more interesting is the appearance of both emerging market equities and bonds.
UK and European sectors have struggled in the last month, along with property.
What’s Hot
- The bounce in US smaller companies has had many a commentator jumping on the bull market bandwagon. The reality is less exciting…
- …They were down 25% at worst from the 2021 peak, and remain down 17%. More in the next teleconference. Ditto on the main North American sector.
- UK index-linked gilts appear regularly in this feature, though mostly as duds. Avoid – unless you have some insight which we do not.
- The appearance of two emerging market sectors is much more interesting.
- Emerging market equities are cheap. They normally respond better to a cheaper dollar, but have bounced despite a firm dollar.
- It is similar for emerging market bonds, which are also, in many instances, not exposed to the high and rising interest rates and high inflation of the West.
- Try and find a space for emerging markets in your asset allocation.
What’s Not
- Two UK equity sectors, and a property sector with a UK focus, underpin how the mood in the UK has turned down in the last month.
- We can see great value in significant parts of the UK market. But, unfortunately, what is cheap can get cheaper.
- Concerns over the economy have also hurt European smaller companies. The sector was down 35% at worst from its 2021 peak, bounced into April 2023, and is now rolling over and down again – down 24% from the 2021 peak, and appearing to head lower. Avoid.
What’s Hot
Name
|
Last Month's Performance %
|
UK Index Linked Gilts
|
3.75
|
North American Smaller Companies
|
2.32
|
Global Emerging Markets
|
1.94
|
North America
|
1.81
|
Global EM Bonds Blended
|
1.76
|
What’s Not
Name
|
Last Month's Performance %
|
Property Other
|
-3.26
|
European Smaller Companies
|
-2.94
|
Europe Including UK
|
-1.92
|
UK All Companies
|
-1.83
|
UK Equity Income
|
-1.83
|
Performance 01/06/2023 – 27/06/2023
All performance figures quoted as total return in GBP