Market Commentary 1 October - 31 December 2022
December 2022 closes off a tough year for investment markets. It’s now well-reported how high inflation has led central banks to aggressively increase interest rates, which has weighed on the returns of both bond and share markets.
While 2023 will see the degree that this affects the wider economy, the good news is that the rate of inflation appears to have peaked, and the repricing of both fixed interest and share markets last year gives a much better starting point for future returns. As one example, the income yield available on NZ and overseas bond investments has approximately doubled over the past year. As mentioned previously, these higher rates will begin to flow through into portfolio returns. This is good news for portfolios with exposure to these assets.
Investment markets are always forward-looking which means markets begin to recover before the real economy does. This highlights one of the fundamental beliefs of Lifetime’s investment philosophy: “You can’t control the markets, but you can stay true to your goals.” This means staying focused and disciplined through the market ups and downs and keeping an eye of the road ahead, rather than in the rear-view mirror.
Please don’t hesitate to contact your Lifetime Financial Adviser if you wish to discuss anything further.