Monthly Investment Review and Outlook

March 2019 (click to download)


Better risk appetite and GBP weakness translated into strong equity performance across the board in March. The US market appreciated 3.0% in GBP terms, followed by the UK (+2.9%), Emerging Markets (+2.8%), Europe and Japan (both +2.6%).


Bonds also strengthened broadly. Gilts gained +3.5% on Brexit worries while UK corporates gained 2.7%. US and European government bonds advanced +2.0% and 1.8% respectively.


GBP reversed course in March, declining -2.2% versus JPY, -1.7% versus USD and -0.4% versus EUR.


In USD terms, oil continued to rally, gaining a further +5.1%, while gold weakened -1.8%.

Investment Outlook

So far, 2019 has been a better year for equity markets. While economic growth remains a concern in Europe especially, there are signs of improvement in China and Central Bank accommodation should temper the slowdown by providing liquidity.


The policy challenges of 2018 (Brexit and US-Chinese trade disputes) rumble on, but must eventually find a resolution – some seem to be moving in the right direction already.


The decline in stock markets last year meant valuations were supportive at the start of 2019. The Manager expects modest assumptions around earnings growth and dividend yield to be enough to support share prices.


Finally, while risks remain in credit markets and in the durability of this economic cycle, the Manager thinks these risks are likely to remain contained in the near term. Inflation expectations, and therefore interest rates, are still low. The Manager believes the recent slowdown will be seen as another mid-cycle pause, and not the beginnings of a more sustained downturn.


The Manager does not see the indicators typically associated with end-of-cycle conditions and, hence, thinks there is a low probability of a recession in 2019.


While the Manager expects the year to end on a positive note, economic and policy decisions, and thus markets, will not move in a straight line. 2019 will have its share of upward and downward moves, and the Manager will continue to use its research to identify high quality, resilient investments which it feels will either add to return and/or reduce the experience of volatility in client portfolios. The Manager favours the concept of a barbell approach: exposure to investments that will drive capital growth and total return, balanced with assets that provide some ballast to portfolios against the turbulence in markets due to volatile news flow and financial data.

Source: Close Brothers Asset Management


Close Brothers Asset Management is a trading name of Close Asset Management Limited and Close Asset Management (UK) Limited. Both companies are part of Close Brothers Group plc, are registered in England and Wales, and are authorised by the Financial Conduct Authority. Registered office: 10 Crown Place, London EC2A 4FT. VAT registration number: 245 5013 86


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