The coronavirus has unsettled markets and had repercussions throughout China, the far east and globally. So far, the virus has infected over 24,300 people and caused 490 deaths within China (as of Feb 5th 2020). The World Health Organisation has declared a global health emergency and the virus has spread to 25 countries throughout the world. Much of China is under quarantine. All visitors from China have now been barred to many other countries and many of China’s borders closed.
Chinese financial markets reopened to a sell-off after an extended Chinese New Year. Businesses and factories throughout China have remained closed impacting Chinese manufacturing including iPhones, car parts, clothing and the supply chain to other parts of the world. Hong Kong car manufacturers have already announced a shut down due to a shortage of car manufacturing parts from China and carmakers in Europe and the US have also warned of being only weeks away from the same fate. The China-US trade agreements based on imports and exports between the two countries may need to be relaxed as borders are closed. The decrease in demand from China has also impacted commodities with oil and even coffee prices taking an unexpected dive.
Not surprisingly, over the past month the poorest performing markets were the Pacific and emerging markets. Japan has also been impacted, but to a lesser extent. The UK, Europe and the HSBC American index fund have had negative returns over the past month but over longer time periods have remained positive.
The best returns over the past month have been the property, bond funds, and the L&G US fund. Global funds are also still posting positive returns. The iShares property fund has bounced back over the past month, but is still down over the past 6 months. The bond funds which are used as the basket of safe-haven assets have performed well over the last month, but equity markets, on the whole, produced negative returns.
Last month, we continued to be out of a portion of the Pacific market and after the sharp drop in Property prices, were also partially out of property with the allocation instead being spread across the bond basket. For the coming month, the trend in the Pacific has continued to take us further out of the Pacific market and also slightly out of the emerging markets. We are back into property again. Although many of the other equity markets have shown a downturn over the past month, this has not been sustained over time or dropped enough to trigger any other reduction in asset allocation at this time.
All Guardian portfolios except for the Adventurous portfolio outperformed the benchmark over the past month. The Adventurous portfolio underperformed due to its higher percentage of equity. All Guardian portfolios continued to have lower volatility and maximum drawdowns than the benchmarks.
All Green Path portfolios continued to outperform over the past month and 6 months with all but the Strategic portfolio also outperforming over 3 months. The worst performing funds for Green Path were again Asian funds with Europe, the UK and Emerging Markets also hit over the past month.
Heritage portfolios over the past month underperformed except for the Cautious portfolio with the worst performing funds in Asia, the emerging markets, or the UK. For all longer time periods, the Heritage portfolios dramatically outperform the benchmarks.
The Financial Express reports were run on the 4th after the completion of trades and are now available on our webpage under Portfolios at https://www.crossingpoint.co.uk/.