Q2 Funds Update – April to June 2022
Quarterly markets review:
Due to the current economic phenomenon of stagflation, characterised by high inflation rates and slowing economic growth, both share and bond markets globally were under pressure in the second quarter as investors moved to price in further interest rate hikes and an increased risk of recession. Inflation continued to move higher in many major economies during the quarter as both the US and the EU registered a rate of 8.6%. Among equities, the MSCI Value index outperformed the MSCI World Growth index but both saw sharp falls of 16.2% and 21.2%, respectively. Chinese shares proved a bright spot as prolonged lockdowns due to Covid-19 were lifted in some major cities. US equities fell in Q2. Investor focus was trained on inflation and the policy response from the Fed for much of the period. The Fed enacted its initial rate hikes of 0.75%, targeting a rate of 1.5% to 1.75% during the quarter and signalled that there would be more to come. Even so, the Central Bank admitted the task of bringing inflation down without triggering a recession would be challenging. Financial managers argued that the Fed is behind the curve to achieve a soft landing and should have incrementally raised interest rates early last year with emerging signs of inflation rather than stimulating the economy with 0% interest rates and ongoing monthly bond purchasing. Declines affected all sectors although consumer staples and utilities were comparatively resilient. There were dramatic declines for some stocks, most notably in the media & entertainment and auto sectors. Eurozone shares saw further steep declines in Q2 as the war in Ukraine continued and concerns mounted over potential gas shortages. Higher inflation is also denting consumer confidence, as the Governing Council intends to raise the key ECB interest rates by 25 basis points at its July monetary policy meeting with a further rise likely in September. Top performing sectors included energy and communication services while information technology and real estate experienced sharp falls. Concerns over the higher cost of living and possibility of recession saw the European Commission’s consumer confidence reading fall to -23.6 in June, the lowest level since the early stages of the pandemic in April 2020. Continued disruption to gas supplies due to the war in Ukraine saw Germany move to phase two of its emergency energy plan. The next phase would involve rationing gas to industrial users, and potentially households as well. A flash estimate from Eurostat signalled inflation at 8.6% in June, up from 8.1% in May, with energy the biggest contributor to the rise. |
Share Class |
30 Jun |
30 Mar |
Share Class |
30 Jun |
30 Mar |
Share Class |
30 Jun |
30 Mar |
Share Class |
30 Jun |
30 Mar |
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A1 Accumulator (EUR) |
0.4969 |
0.5406 |
Accumulator (EUR) |
0.4787 |
0.5100 |
Accumulator (EUR) |
0.5612 |
0.6131 |
Accumulator (USD) |
0.8835 |
0.9916 |
A2 Accumulator (EUR) |
0.4601 |
0.5003 |
I Distributor (EUR) |
0.4063 |
0.4362 |
Distributor (EUR) |
0.5422 |
0.5941 |
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Distributor (EUR) |
0.4580 |
0.4998 |
C Distributor Inc (EUR) |
0.4316 |
0.4649 |
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GBP Hedged Distributor (GBP) |
0.4423 |
0.4741 |
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