Market Commentary 1 July - 30 September 2022
Returns during 2022 have been weaker as central banks have continued to raise interest rates to combat high rates of inflation, moving away from the stimulatory policies of the last two years.
The unusually rapid pace of interest rate hikes has impacted both share and bond markets. This has meant fixed interest investments have not provided their usual diversification benefits in offsetting weakness in shares. However, as bonds begin to turnover in portfolios at higher coupons, returns from this asset class are expected to improve.
Furthermore, unhedged foreign currency exposure from overseas share investments has meant that there has been a cushioning effect by the exchange rate falling. For example, the value of the NZ dollar is down some 9% against the US dollar in the September quarter. For a more in-depth discussion on how this process works please contact your Lifetime Adviser.
Through the recent volatility and the pandemic that came before it, the recommended focus should always be on the longer-term return numbers which remain positive. As always, maintaining a long-term view remains vital in achieving results from any well-designed financial plan. Markets can and do fluctuate, and this will continue to be a natural part of long-term investing.
Please don’t hesitate to contact your Lifetime Financial Adviser if you wish to discuss anything further.