As the curtain rang down on a tumultuous 12 months in 2022, and a new year began to unfurl, asset managers were in for a tumultuous ride. Questions surrounding the bottom of the cycle were abound, and analysts had mixed views of the market situation. Whilst some were positive, others held the view that the worst was yet to come.
Adding to the uncertainty, additional external pressures further compounded the situation. With the global pandemic yet to fully recede, many investors chose to sit tight and await further clarity; an understandable yet complex decision to make.
For those that did build or retain in their portfolio, activity was predominantly in ‘risk-off’ assets. Investors sought to diversify away from traditional markets, looking to gold, cash and other alternative asset classes to ensure a lower level of volatility in their portfolios.
It was a period of desolation for the retail investors, as attention on macro market moves, corporate earnings, growing trade deficits, political uncertainty, and an apparent focus on protecting international investments added to investment anxiety.
At the same time, there were still a few positives to be taken. Whilst volatility was at an all-time high, leaders in the industry deemed it to be more of a market correction than a crash. With a fall of just 5% in the S&P 500 Index in the first quarter, portfolio managers were hopeful that we could avoid the worst-case scenario.
Encouragingly, all signals suggested that there had been an increase in portfolios with more for value-oriented investments, as investors searched for greater returns, and companies addressed acute valuation and revenue gaps. Domestic businesses were also seen to be outperforming, as residents looked to keep their capital closer to home.
As for the individual investors, analysts were largely reluctant to recommend anything but caution. With the value of the dollar on a seemingly perpetual downswing, stock valuations changing every day, and investment environments becoming ever more uncertain, making sound decisions has become increasingly difficult.
Overall, forecasters have been fairly optimistic in recent weeks and have provided a brighter outlook for the future. As the macroeconomic conditions continue to evolve, the long-term impact on asset portfolios is still up for debate. Despite this, it is clear that the market is still a place of opportunity, and that with the right focus and knowledge, investors can still make a good return.