Private wealth portfolios recoup ‘Liberation Day’ losses

According to Asset Risk Consultants’ (ARC’s) latest data, the average return of the ARC Sterling Steady Growth Index (based on the most common risk profile run by discretionary investment managers) for May, is estimated to rise by 2.8 per cent resulting in year-to-date performance of -0.4 per cent.

May saw a continuation of the rebound in equity markets from the April lows with confidence boosted by the announcement of a temporary 90-day reduction in US-China tariffs and better-than-expected earnings announcements from the likes of Nvidia.

The result was a gain of almost six per cent in global equities when measured in US dollars. Investors with a bias towards growth were back in the ascendency, with global growth stocks outperforming their value counterparts by around six percentage points.

Dan Hurdley, managing director of ARC Research, commented: “As Benjamin Graham observed more than half a century ago, in the short run, the stock market is a voting machine rather than a weighing machine.

“The recovery in stock markets during May perhaps reflects a reassessment of the economic damage that the US may cause in aggressively pursuing autarky. 

"However, this is not a time for investors to relax, as in the longer term, stock markets behave like weighing machines and the reversal of global liberalisation will inevitably bring slower economic growth, higher budget deficits and lower corporate profitability. 

"Those investors who have until recently enjoyed the benefits of being ‘risk-on’ should probably be considering a move to a ‘risk-neutral’ position for their portfolios.

“Ignore the recent market tremors at your peril,” he added. 

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Image: Dan Hurdley, managing director, ARC Research