Global equities to face further downside
Global equity markets can expect further downside, particularly in the US, following the October sell-off, according to Hexavest’s Christian Crête.
Crête said global stock markets entered October in good spirits following a 5.3 per cent gain in Q3, but declined almost seven per cent during the month, bringing the year-to-date return of the MSCI World Index into negative territory.
“Unlike earlier this year, the recent bout of volatility felt more like a typical correction, with defensive sectors and value stocks largely outperforming their cyclical and growth peers,” he said. “Even the popular ‘do no wrong’ FANG stocks were not able to avoid the correction.”
The portfolio manager said while global equity markets recouped earlier losses in the closing days of October, he expected further downside, particularly in the US, as financial markets remained disconnected from fundamentals.
With this in mind, Money Management used FE Analytics to see which funds managed to stay afloat in the three months to date, and which took a beating.
Only a handful of funds in the global equities sector managed to stay above the line, with the Specialised Global Fundamental Equities fund sitting in top spot with returns of 5.28 per cent for the three months to date, which isn’t surprising given it aims to achieve performance while preserving capital.
Fidante’s Credit Suisse Global Private Equity fund returned 4.35 per cent, Alluvium Global returned 0.65 per cent and Russell Medapiri International Private Equity returned zero per cent, while all other funds in the sector fell into the negative.
But, around 68 funds in the asset class (exchange-traded funds included) managed to stay above the MSCI World Index, which dropped to -5.79 per cent for the three months to date, but recovered slightly in the month to date to -1.17 per cent.
The chart below shows the performance of the MSCI World Index for the three months to date.
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