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Market View

Market View: May

Many people open a new ISA and review their investment portfolios in April as it marks the start of the new tax year. It is why stock market performance is often more closely scrutinised by investors during this month and why financial advisers get asked to discuss the bigger global economic picture by their clients. So it was welcomed that April proved to be a much calmer month in general for equities, showing fewer signs of volatility than we have experienced during the first quarter of 2016. It reminds us that, as investors, we have to be prepared for periods of volatility, understanding that eventually they will be broken by moments of calm.
In the Eurozone, gains in the energy sector and growth of 0.6% in GDP data boosted equities and posted positive returns for the month. In the UK, the approaching EU referendum continued to make headlines, fuelling heated debate, a situation likely to continue until the European Union referendum in June. The FTSE All-Share did record a gain of 1.1% amid ongoing Brexit uncertainty, and the British Pound managed to hold its ground regaining losses made by the end of April.
Across the North Atlantic Ocean, in the US the S&P 500 posted modest gains for the month thanks to a combination of factors which included the resources sectors performing well against a weak dollar. The first-quarter GDP figures were weaker than expected and this news had a negative impact on markets by the end of the month. The technology sector did not help equities; Apple reported its first quarterly revenue fall in 13 years, whilst Alphabet and Netflix also posted disappointing returns for quarter one. The Federal Reserve (Fed) left rates unchanged at its April meeting as was widely expected, however a lack of clarity over future interest rate rises continues to fuel weakness in the dollar.
Emerging markets did not perform well for British investors reporting -1.35% returns. On the other side of the world, The Bank of Japan’s decision to leave quantitative easing measures unchanged was greeted with some disappointment; however the Yen rose sharply on the back of this news.  In April, major corporate bond markets fared well for the second month in a row, but year to date, their performance has yet to match the returns of government bonds.

Past performance is not a reliable indicator of future results. The value of investments can go down as well as up and may be affected by exchange rate variations. As a result, the benefits available under any policy/account linked to the model portfolio may be lower than anticipated. You may not get back the amount originally invested. The portfolios referenced above are managed by Sanlam Four.

Sanlam & Sanlam Investments and Pensions are trading names of Sanlam Life & Pensions UK Limited (SLP (Reg.in England 980142)) and Sanlam Financial Services UK Limited (SFS (Reg. in England 2354894)). SLP is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. SFS is authorised and regulated by the Financial Conduct Authority. Registered Office: St. Bartholomew’s House, Lewins Mead, Bristol, BS1 2NH.

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