Love Actually? Disappointment, actually

by Lorenzo La Posta, CFA — Portfolio Manager

— At times great companies might not be great investments

A few weeks ago, during the Christmas period, I treated myself to the ideal night in. I was sat on my comfy sofa, blanket on my legs, my girlfriend by my side, hot chocolate in one hand, and TV remote in the other. The lights from the Christmas tree were too bright to enjoy a proper televised experience, but that didn’t bother me.

Market Snapshot

• • Global equities fell 1.3% last week
  • Three Unidentified Flying Objects were downed over North America
  • Brent crude rose 8.1% last week to $86.39 a barrel
  • Gold was flat at $1865.57 per ounce last week

AI: is your job safe?

by Jackson Franks — Analyst

— To see if AI has the ability to take my job, I put this to the test and asked ChatGPT to write my blog.

Artificial Intelligence, otherwise known as AI, is becoming ever more prominent in our day-to-day lives, both personally and at work. The market size of AI is gaining momentum. According to Precedence Research, the global AI market size was estimated at USD 119.78bn in 2022 and it is expected to be USD 1,597.1bn by 2030, with a forecast Compound Annual Growth Rate (CAGR) of 38.1% from 2022 to 20301. So, what’s driving this growth?

Market Snapshot

• • Global equities returned 1.3% last week
  • Most major developed indices saw positive gains last week on the back of decent US Q4 earning reports and upside surprises in economic data
  • Brent crude fell 7.8% last week to $79.9 per barrel
  • Gold fell 3.3% last week to $1864.97 per ounce

Turning away from the glass-halfempty mentality

by Gregoire Sharma, CFA — Senior Portfolio Manager & Research Analyst

— It seems, inflation has likely peaked and is expected to fall materially this year

As we turn the page on 2022 and look with cautious optimism at 2023 for some respite in markets, investors are appraising the investment landscape with an understandable degree of trepidation. Indeed, following the macroeconomic and geopolitical events of 2022, losses in fixed income markets were on par with those in equities making it one of the worst years on record for balanced portfolios.

Market Snapshot

• • Global equities returned 2.2% last week
  • Following Germany’s promise of military support, the US announced that it would be sending 31 M1 Abrams tanks to aid Ukraine’s battle against Russian forces
  • Brent crude fell by 1.1% to $86.66 per barrel
  • Gold rose 0.1% to $1928.04 per ounce

No stress

by Matt Connor — Investment Analyst

— Heightened emotions often cloud judgement and can lead to irrational decision making.

I have recently returned from a holiday to Cape Verde, where the country’s motto of “No Stress” suits the tropical island lifestyle. After returning to (a much colder) reality it has dawned on me that investors ought to take a leaf out of the Cape Verdean’s book and try not to stress and act in haste when making investment decisions.

Market Snapshot

• • Global equities fell 0.4% last week
  • A mixed week for major indices: the European Central Bank indicated it intends to hike interest rates and there are recession fears in the US, however, there were some positive returns in Asia
  • Brent crude rose 2.8% to $87.63 a barrel
  • Gold rose 0.3% to $1926.08 per ounce

Well, that wasn’t expected…

by Richard Parfect — Fund Manager

— Risk is integral to investing; it is ultimately what determines returns

Having booked my first skiing holiday in 11 years with some friends in Chamonix towards the end of January, I’m seeing news articles showing temperatures approaching 10c and zero snow on the ground. When I booked the trip for my group, of all the things I considered that might scupper the trip; no snow in the Alps, in January, was not one of them. Investing is far from immune to such tales of the unexpected.

Market Snapshot

• • Global equities returned 3.3% last week
  • The World Bank released its latest round of economic projections, with global growth projection for 2023 now at 1.7%, marking a downgrade from 3.0% forecasted in June
  • Brent crude rose by 8.5% to $85.28 per barrel
  • Gold rose 2.9% to $1920.23 per ounce

Divine inspiration

by Alex Harvery — Senior Portfolio Manager & Investment Strategist

— On a brighter note, and with Janus looking forward, 2023 presents us with a fuller palette of investment opportunities than we’ve seen for some years

The month of January takes its name from the Roman god Janus, whose two opposing faces depict duality and transition, endings, and new beginnings. This god of gateways looks both backward and forward, and if ever there was a January to excite him (he is generally depicted with a beard), then this is surely it.

Market Snapshot

• • Global equities returned 1.8% last week
  • Most World indices saw positive returns to start the new year
  • Brent crude fell 8.5% to $78.57 per barrel
  • Gold rose 2.3% to $1865.69 per ounce

What were you thinking?

by Tom Delic — Portfolio Manager

— A valuation discipline is designed to place the odds in your favour.

2022 has been an eventful year across financial markets, and while anything could happen during the last few weeks of December, I thought it would be worth reflecting on the extraordinary market behaviour we have seen over the past few years.

It feels as though there are numerous examples from the final throws of this cycle that could be placed under the microscope of the financial historian, decades from now. Could it be Austria’s 100-year bond that yielded 0.375% in December 2020, down over 60% since? Or perhaps US CCC rated corporate debt yielding 7.5% in the summer of 2021, a credit rating that has a long-term average annual default rate of 25%?

Market Snapshot

• • Global equities fell 2.5% on the week
  • Four European Parliament officials, including vicepresident Eva Kaili, were charged with corruption offences as part of an investigation into claims that Qatar attempted to buy influence in a key upcoming vote
  • Brent crude fell 11.1% on the week to $76.1 a barrel
  • Gold remained flat on the week at $1797.3 an ounce

A turning point for UK mid-caps

by Mark Wright, CFA — Portfolio Manager

— Fearful investors heading for the exit have crushed valuations this year by driving down share prices.

So far, the year 2022 has been one that investors in UK mid-capitalisations (mid-caps) would probably prefer to forget. The first six months of this year witnessed the worst relative performance of UK mid-caps vs UK large capitalisations (caps) on a rolling six-month basis since 1986 (as far back as I could find data). By 30th June, they had underperformed UK large caps by a staggering 18%. The performance gap has since widened a little to over 19% on a year-to-date basis. The absolute performance of UK mid-caps is not as stomach churning, but at -15% it is still poor.

Market Snapshot

• • Global equities returned 1.1% last week
  • Most World indices saw positive returns
  • Brent crude rose 2.3% to $85.57 per barrel
  • Gold rose 2.4% to $1797.63 per ounce

Has gold lost its shine?

by Stephen Nguyen, CFA — Portfolio Strategist

— Historically, gold has proven its ability to preserve its purchasing power when compared to fiat money as it cannot be devalued by central banks

As we approach the end of 2022, it is worth reflecting on asset class returns this year. Global equities and bonds have both suffered significant declines and as a result the traditional balanced portfolio, anchored by these two asset classes, has struggled. Risk assets have had a torrid time due to a combination of factors including bleak economic and earnings outlooks, inflation concerns and heightened geopolitical tensions, which have all weighed on investor sentiment. Surprisingly, gold which has traditionally been deemed as a ’safe haven’ asset has also disappointed this year. Gold is often thought of as a hedge during market downturns and in an inflationary environment, so why has it struggled this year? And does it still warrant a place in investors’ portfolios.

Market Snapshot

• • Global equities rallied 1.7% on the week
  • China locked down one-fifth of the country due to a COVID-19 outbreak
  • Brent crude lost 4.6% on the week, down to $83.6 a barrel
  • Gold returned 0.2% on the week to trade at $1754.9 an ounce

The World Cup effect

by Gary Moglione — Portfolio Manager

— If the S&P 500 declines over the next month you can be confident that the subconscious actions of billions of heartbroken football fans will be partly to blame

As a keen student of behavioural investing, I love reading articles on how human behaviour is influenced by emotion and how this translates to stock market movements. If only there was an event that stirred up extreme emotions that the majority of the world will participate in. It just so happens that the FIFA World Cup is here, and according to audience data around 3.6 billion people watch the tournament on television.

Market Snapshot

• • Global equities rose 6.7% last week
  • Last week saw US midterm elections, key developments for Ukrainian forces, and a below-expectations Consumer Price Inflation (CPI) report that gave the market signs of a potential Federal Reserve (Fed) pivot
  • Brent crude fell by 2.6% over the week to $96.0 a barrel
  • Gold rose by 5.3% to $1771.2 per ounce