Russia's invasion of Ukraine and the related spike in inflation have upended equity markets in 2022, with an autumn chill descending on investor sentiment after some summer sunshine.
However, some funds are faring better than others. Zurich's 5*5 Asia Pacific Fund was showing a small annual gain at the end of July, with Zurich stock pickers favouring shares such as Commonwealth Serum Laboratories (CSL), Hong Kong insurer AIA Group, and BHP.
Persuading people to park their savings in any investment fund is a challenge at the moment given the ongoing volatility in stock markets. From June to mid-August, market gains ranked alongside some of the best summertime stock market rallies on record, according to Kevin Quinn, chief investment strategist at New Ireland.
However, US Federal Reserve governor Jerome Powell (pictured) popped the 16% bounce in mid-August, when he cautioned investors that the Fed's battle with inflation is far from over.
Quinn's view is that the market uplift is looking very much like a classic bear market rally - a burst of growth based on a glimmer that things were about to change.
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"The pace of the market recovery illustrates just how fast markets can and will respond to better news and better times," says Quinn. "For long-term investors, it re-emphasises why remaining invested is so vital to achieving long-term return outcomes."
Quinn adds that for all asset classes, the path inflation takes will remain the main issue for some time to come. This was evidenced in September, when US markets retreated after August consumer price inflation ticked higher on the previous month.
"We must wait a while yet for a newly minted bull market, and a defensive stance in an investment portfolio remains preferable," is Quinn's advice to New Ireland customers.
At Irish Life Investment Managers, chief investment strategist Lenny McLoughlin believes the outlook for equity markets over the next 12 months is dependent on central bank policy, growth, inflation (both expected and realised) and the evolution of the Russia/Ukraine war.
ILIM sees risks in equities as still being skewed to the downside. For share prices to recover, investors will need to believe that policy tightening has peaked, which is unlikely until next year.
"Navigating equity markets is difficult even in a benign environment, but it has become more arduous in the current backdrop, with heightened uncertainty on many issues.
"As a result, the increased volatility evident this year is likely to continue," McLoughlin notes, adding that ILIM's outlook remains positive over the medium to long term, with upside of c.5% per annum expected on a five to ten year view.
