By: Peter McLean
For most of this year, investors have been in a jubilant mood. Fears of a US recession, which dominated in 2022-23, were replaced with the hope of a ‘goldilocks’ economy, with growth remaining firm and inflation gradually easing.
Furthermore, indications from the bond markets in January suggested that the Federal Reserve would cut interest rates soon and potentially as many as six times in 2024 alone. As the positive sentiment spread, stock market record highs became a regular occurrence.
Unfortunately, though, the economy didn’t follow the script. Consistently higher-than-expected inflation and employment figures ignited fears of an overheating economy. Perhaps more interest rate hikes might be needed to cool animal spirits and get inflation under control once and for all? Equity market momentum paused in April, and bond investors signalled that only one or two rate cuts were now more likely this year.
While some elements of inflation have proven stubbornly high, there is little evidence of an upward inflation spiral. In mid-May, when core US inflation fell to 0.3% for the month of April, and 3.6% year-on-year (the lowest annual reading in three years) investors and policymakers breathed a sigh of relief. Since then, equity markets have re-accelerated to new highs, while declining interest rate expectations have supported returns for bond investors.
The path of inflation is a key indicator in the setting of investment strategy as it underpins interest rate policy and can have a meaningful impact on capital markets. Drivers of price pressure, such as inflation expectations and wage growth can be used to indicate inflation’s next move. Currently, neither is trending convincingly higher. It is worth noting that some components of US inflation experience an annual price adjustment in the first quarter of the year, such as healthcare, auto insurance, and financial services. These lagged elements have seen meaningful increases and caused most of the recent inflationary scare.
In addition, longer-term inflation drivers continue to ease gradually. Importantly, the labour market is not in the same place it was two years ago. Since March 2022, job vacancies have fallen by 3.5 million, while the labour force (including those in work and those looking for employment) has grown by about 4 million. This has weighed on wage growth. As time passes, the ratio of labour demand to labour supply will likely fall further. Savings accumulated during the pandemic have been exhausted by most measures, and interest rates remain at the highest level since 2007, making it less likely for consumer spending to re-accelerate.
Consumer resilience supported the economy for longer than most expected, staving off a US recession in 2022-23, something that many feared was inevitable. Our multi-asset portfolios have benefited from our fully engaged position in equities. However, as the consensus has shifted towards this constructive view, sentiment has rallied, and market valuations have re-rated to higher levels.
With growth moderating gradually, lower inflation lies ahead. In due course, this will support lower interest rates with fewer reasons to retain a ‘restrictive policy.’
While there is little evidence for an imminent US recession, should growth continue to slow gradually over the coming months, it may lead to rising unemployment, which in turn could lead to declining consumer spending and corporate profits.
With some perhaps distracted by the bumpy path of inflation and worries of economic overheating, investors would do well to watch these developments closely, ensuring a well-diversified and robust investment strategy for the long term.
Disclaimer: Opinions expressed here are as of the date of publication and subject to change without notice. Stonehage Fleming Investment Management Ltd shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, the information, data, analyses or opinions contained herein or their use, which do not constitute investment advice, are provided as of the date written, are provided solely for informational purposes and therefore are not an offer to buy or sell a security. All investments risk the loss of capital. © Stonehage Fleming Investment Management Limited 2024
All investments risk the loss of capital. The value of investments may go down as well as up and, for products designed to return income, the distributions can also go down or up and you may not receive back the full value of your initial investment. No guarantee or representation is made that the funds will achieve their investment objective. The material on this site does not constitute legal, tax, or advice on investments. If you are unsure about whether a fund meets your requirements, then you should seek professional financial advice before investing.
I confirm I am accessing the website from the country indicated.
All investments risk the loss of capital. The value of investments may go down as well as up and, for products designed to return income, the distributions can also go down or up and you may not receive back the full value of your initial investment. No guarantee or representation is made that the funds will achieve their investment objective. The material on this site does not constitute legal, tax, or advice on investments. If you are unsure about whether a fund meets your requirements, then you should seek professional financial advice before investing.
I confirm I am accessing the website from the country indicated.
All investments risk the loss of capital. The value of investments may go down as well as up and, for products designed to return income, the distributions can also go down or up and you may not receive back the full value of your initial investment. No guarantee or representation is made that the funds will achieve their investment objective. The material on this site does not constitute legal, tax, or advice on investments. If you are unsure about whether a fund meets your requirements, then you should seek professional financial advice before investing.
I confirm I am accessing the website from the country indicated.
All investments risk the loss of capital. The value of investments may go down as well as up and, for products designed to return income, the distributions can also go down or up and you may not receive back the full value of your initial investment. No guarantee or representation is made that the funds will achieve their investment objective. The material on this site does not constitute legal, tax, or advice on investments. If you are unsure about whether a fund meets your requirements, then you should seek professional financial advice before investing.
The information and materials in this website and any pages thereof (the "Website") contain information on foreign collective investment schemes managed by Stonehage Fleming Investment Management Limited which have not been approved by the Swiss Financial Market Supervisory Authority (FINMA) for distribution in or from Switzerland to non-qualified investors in accordance with the Federal Act on Collective Investment Schemes of 23 June 2006 ("CISA"). Therefore, the information contained in the following pages is only directed to qualified investors within the meaning of Art. 10 Para. 3, 3bis and 3ter CISA ("Qualified Investors") with domicile/registered seat in Switzerland.
QUALIFIED INVESTORS
1. According to Art. 10 Para. 3 of the Swiss Federal Collective Investment Schemes Act (CISA), Qualified investors are considered:
a. Regulated financial intermediaries such as banks, securities dealers, fund management companies as well as asset managers of collective investment schemes,
b. Regulated insurance companies,
c. Public entities and insurance companies with professional treasury departments,
d. Companies with professional treasury departments;
e. High net worth individuals,
f. Investors who have entered into a written asset management agreement with a supervised financial intermediary (such as banks, securities dealers, fund management companies as well asset managers of collective capital investments).
2. According to Art. 6 Para. 2 of the Swiss Federal Collective Investment Schemes Ordinance (CISO), in particular Art. 10 Para. 4 CISA, qualified investors are also considered:
Independent asset managers and investors who have entered into a written asset management. agreement with independent asset managers to the extent that:
a. The asset manager as a financial intermediary is subject to the Money Laundering Act (MLA) of 10 October 1997 (Art. 2 Para. 3 lit. e MLA);
b. The asset manager is subject to a professional code of conduct which is recognized as a minimum standard by the supervisory authority, and
c. The asset management contract contains the recognized guidelines of a professional organization.
3. A high net worth individual is someone who can confirm in writing that they directly or indirectly have net financial investments of at least 2 million Swiss francs.
* Financial investments are bank assets (demand or time deposits), fiduciary assets, securities (including collective investment schemes and structured products), derivatives, precious metals as well as life insurances with a replacement value.
* Direct investments in real estate and claims from social insurances (including claims from the 2. and 3. Pillar), are not considered financial investments.
* The confirmation of financial investments has to be submitted no later than the time the collective investment scheme is offered and distributed.
* The advertiser or provider of the collective investment scheme must review the existence of the required financial investments if there are doubts as to whether the person qualifies as a high-net-worth individual.
* A written confirmation is not necessary if the required financial investments are deposited at the bank or the securities dealer who is also offering or distributing the collective investment scheme.
Private investment vehicles which have been set up for private persons can be treated like high-net-worth individuals as long as they hold net investments of over 2 million Swiss francs.
We have appointed 'ARM Swiss Representatives SA' as our Swiss representative for the following funds: Stonehage Fleming ("SF") Global Best Ideas, SF Global Responsible Investment Fund, SF Global Multi Asset Portfolio, and SF Private Capital Fund. The paying agent in Switzerland is Banque Heritage S.A. The Prospectus and the Articles, KIIDs and additional documentation including the annual and semi-annual report can be obtained free of charge from the representative in Switzerland. Full contact details are contained within the fund documentation.
All investments risk the loss of capital. The value of investments may go down as well as up and, for products designed to return income, the distributions can also go down or up and you may not receive back the full value of your initial investment. No guarantee or representation is made that the funds will achieve their investment objective. The material on this site does not constitute legal, tax, or advice on investments. If you are unsure about whether a fund meets your requirements, then you should seek professional financial advice before investing.
I confirm I am accessing the website from the country indicated.
All investments risk the loss of capital. The value of investments may go down as well as up and, for products designed to return income, the distributions can also go down or up and you may not receive back the full value of your initial investment. No guarantee or representation is made that the funds will achieve their investment objective. The material on this site does not constitute legal, tax, or advice on investments. If you are unsure about whether a fund meets your requirements, then you should seek professional financial advice before investing. This information is not directed at any US person or any person in the US and the information does not constitute an offer or solicitation to buy or sell shares or units in any Stonehage Fleming fund to any US person or to any person in the US.
The following pages contain information on collective investment schemes (both local and foreign) that have been approved by the Financial Sector Conduct Authority (FSCA) for distribution in South Africa, in accordance with the Collective Investment Schemes Control Act, No 45 of 2002 (“CISCA”). The information and materials have been prepared for information purposes only and do not constitute a personal recommendation or advice or a solicitation to buy any product or service. They do not take into account the financial circumstances, needs or objectives of the recipient. In addition to the information provided, you may wish to consult an independent professional adviser.
All investments risk the loss of capital. The value of investments may go down as well as up and, for products designed to return income, the distributions can also go down or up and you may not receive back the full value of your initial investment. No guarantee or representation is made that the funds will achieve their investment objective. The material on this site does not constitute legal, tax, or advice on investments. If you are unsure about whether a fund meets your requirements, then you should seek professional financial advice before investing.
I confirm I am accessing the website from the country indicated.
All investments risk the loss of capital. The value of investments may go down as well as up and, for products designed to return income, the distributions can also go down or up and you may not receive back the full value of your initial investment. No guarantee or representation is made that the funds will achieve their investment objective. The material on this site does not constitute legal, tax, or advice on investments. If you are unsure about whether a fund meets your requirements, then you should seek professional financial advice before investing. This information is not directed at any US person or any person in the US and the information does not constitute an offer or solicitation to buy or sell shares or units in any Stonehage Fleming fund to any US person or to any person in the US.
The following pages contain information on collective investment schemes (both local and foreign) that have been approved by the Financial Sector Conduct Authority (FSCA) for distribution in South Africa, in accordance with the Collective Investment Schemes Control Act, No 45 of 2002 (“CISCA”). The information and materials have been prepared for information purposes only and do not constitute a personal recommendation or advice or a solicitation to buy any product or service. They do not take into account the financial circumstances, needs or objectives of the recipient. In addition to the information provided, you may wish to consult an independent professional adviser.
This information is directed only to Canadian residents that are "accredited investors" as defined under section 1.1 of National Instrument 45-106 Prospectus Exemptions and "permitted clients" as defined under section 1.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. This information is not, and under no circumstance to be construed as, an offering memorandum, an advertisement or a public offering of any securities described herein in any province or territory of Canada (each, a "Canadian Jurisdiction"). Under no circumstances is this information to be construed as an offer to sell securities or the provision of advice in relation to any securities. Any offer or sale of any securities described in this information will be made pursuant to the definitive private placement documents for the securities. In addition, any offer or sale of, or advice on, any securities described in this information will be made only by a dealer or adviser registered or relying on an exemption from registration in the applicable Canadian Jurisdiction. No Canadian securities regulatory authority has reviewed or in any way passed upon the information contained in this website or the merits of any securities described in it, and any representation to the contrary is an offence.
By clicking on the button "I agree" you certify that you are an accredited investor as defined under section 1.1 of National Instrument 45-106 Prospectus Exemptions and "permitted clients" as defined under section 1.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.
All investments risk the loss of capital. The value of investments may go down as well as up and, for products designed to return income, the distributions can also go down or up and you may not receive back the full value of your initial investment. No guarantee or representation is made that the funds will achieve their investment objective. The material on this site does not constitute legal, tax, or advice on investments. If you are unsure about whether a fund meets your requirements, then you should seek professional financial advice before investing.
IMPORTANT: This information on this website is only intended for a) Qualified Clients, within the meaning of that term in the Israeli Investment Advice, Investment Marketing and Portfolio Management Law 1995, OR b) Qualified Investors within the meaning of First Addendum to the Israeli Securities Law 1968. It is not intended for any other type of investor. If you are unsure about whether you meet the criteria as a Qualified Client or Qualified Investor, please seek legal advice prior to reviewing this information.
By clicking on the button "I agree" you certify that you are a) a Qualified Client, within the meaning of that term in the Israeli Investment Advice, Investment Marketing and Portfolio Management Law 1995, OR b) Qualified Investors within the meaning of First Addendum to the Israeli Securities Law 1968.
This site is not available in your jurisdiction. If you require further information about Stonehage Fleming Investment Management please contact us at enquiries@stonehagefleming.com.