The Equitile Resilience Fund aims to deliver capital growth by investing in large, growing companies in the developed markets. It is managed according to our core investment principles and uses the Equitile Fair Fee Model.
Latest Overview GBP - December 2018 (print version)
The equity market selloff picked up pace again in December, making Q4 2018 the worst since the 2008 Global Financial Crisis and, by some measures, the worst December stock market performance since 1931. Disappointingly this has resulted in a high single figure percentage loss for your Fund over the full 2018 calendar year.
The bulk of December’s selloff was caused by the Federal Reserve’s December 19th rate hike which, although expected, was accompanied by a relatively hawkish commentary which notably failed to acknowledge either the disinflationary effect of lower oil prices or the tightening of financial conditions caused by recent financial market turbulence.
During the course of the month we reduced your investments in continental Europe to just 4% of your portfolio. The fiscal rigidities associated with Eurozone membership suggest Europe may struggle to deal with the potential downshift in global growth triggered by a slowing Chinese economy.
The US yield curve inverted in December with 5-year Treasury yields falling below 2-year yields. This suggests financial markets are now anticipating a sharp slowdown in US economic activity, perhaps even to recessionary conditions. Although possible, we believe the underlying strength of the US economy remains sufficient to avoid this scenario; this outcome would, however, likely require both progress on US-China trade and a more patient Federal Reserve, which we expect.