October often proves to be a volatile month for equity markets and this year has been no exception with markets selling off for most of the month. Performance of some of the main indices is highlighted below:

(All figures are based on bid to bid pricing with income reinvested, in Sterling terms)

Once again, investors’ concerns centred on America. A third increase in Interest Rates, along with the accompanying rise in bond yields, brought fears their economy may now slow quicker than originally expected. Add in the ongoing and much talked about trade tensions with China and fears grew for the impact all of this would have on the direction of global growth moving forward.

Back at home, Brexit talks continued to splutter and this impacted more on domestically focused companies outside of the large cap index, where we do have some exposure given the longer term growth opportunities.

Towards the end of the month there appeared to be slightly more positive news, with the expectation of a deal being reached for Financial Services – a vital industry to the UK. Phillip Hammond also revealed his Budget for 2019, announcing an “end to austerity” and raising the personal allowance and income tax thresholds.

In performance terms, wider market falls have been replicated in our portfolio returns albeit the inclusion of other assets such as bonds and property has allowed us to protect capital slightly better than is highlighted in the graphs above. As we move into the closing stages of 2018, this latest sell-off has, in our view, provided opportunities for markets to generate positive returns to the year end.


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