Market & Investment Updates

Quarterly Update - Q2 2020

Andrew Hardy, CFA

01 July 2020

Monthly Market Review

Despite the most significant wobble in bond and equity markets since the trough on 23rd March, risk assets still made further progress in June, extending the recovery to one of the sharpest on record. The MSCI World index returned 2.6%, led this time not by the US but by Europe and Asia, with gains of 3.8% and 8.2% respectively. China was particularly strong, up 9%, driving a return of 7.4% from emerging markets.Signs of a much better than expected rebound in growth as lockdowns around the world were eased saw bond markets sell off in the early part of June. The immediate trigger was a wholly unexpected rise in US payrolls in May of 2.5m, bringing unemployment down by 1.4%age points. The yield on 10 year Treasuries spiked up by 25bps to 0.9% and equities rose sharply, but the euphoria was punctured as evidence began to emerge of a worrying pick up in coronavirus cases across parts of the US, including its most populous States, triggering a roll-back of lockdown easing measures and fears of a damaging second wave. Cautious comments by the Fed about the state of the economy added to the concerns. Wall Street dropped by 7% in 2 days, but the wall of liquidity generated by the Fed and other major central banks in the past 3 months and broadening evidence of a robust rebound in growth underpinned risk assets, with equity and credit markets recovering to end the month with widespread gains. Read More >

Q2 Harmony Review

The Harmony Portfolios participated fully in the recovery as our decisions to maintain and indeed add to equity and credit holdings during March and April were well rewarded. The strongest returns came from the Global Equity Fund (+21.3%) followed by the US Dollar Growth (+17.0%) and Asian Growth (+16.1%) Portfolios. While the Australian Dollar Growth Portfolio delivered the smallest gain in its base currency (+7.8%), the strong rebound in the AUD currency over the quarter meant that it was the best performing Portfolio in USD terms (+21.8%). The Cautious Income Portfolio returned 9.7% for the quarter while the other Portfolios delivered low to mid-teens returns. Read More >