Due to market developments, an emergency update was carried out. Please read the below note for an explanation.
As you will be aware, the UK market has been a roller-coaster ride over the last month. In the aftermath of the mini-budget, Gilts were more volatile than Bitcoin for a couple of weeks! We updated several times during our production period and delayed our final output to the last possible moment.
Nevertheless, at the time we went to press, Boris Johnson had jetted back from holiday and Britain was facing another leadership election, offering the Conservative party members polarised economic choices.
Since then, the fundamental uncertainty, of whether to stimulate a slowing economy or to make controlling debt and inflation the priority has been settled in favour of the latter. The impact on UK markets has not been dramatic, but it has been decisive and things have settled at a significantly different level than assumed in our initial October update.
The size of the effect on the market is larger than the last time we issued an Emergency Update, in the aftermath of the Brexit Referendum, we are convinced that current market levels reflect a new reality and are not simply a further example of extreme market volatility.
The changes are large enough that an update is necessary to ensure that our model is compatible with current market conditions. The effects are visible in the level of expectations and asset allocations. They will also provide a better reference point for future updates.
Risk-rated multi-asset portfolios' level and variability of returns are critically important. Getting the asset allocation right is the key driver of both. So much so that 90% of investment returns depend on the right asset allocation.
Our optimised strategic multi-asset allocations are grounded in robust and academically tested investment beliefs. Our asset model has delivered consistent and market-resilient asset allocations to our clients for over a decade.