1st Quarter 2013 Round Up

For most investors Q1 has probably exceeded expectations and equity elements of portfolios should have performed strongly. Almost all markets seem to have advanced during this quarter, from Emerging Markets to Developed Markets, with the U.S. and surprisingly to many, Japan performing strongly. Currencies, like equity markets have moved considerably, with USD strengthening against a basket of most global currencies, and Sterling weakening as many consider the currency overvalued given the precarious state of the UK economy (Currency). 

The seemingly relentless climb in global equities did dissipate in March however. The Cyprus crisis helped to remind investors that although the global outlook may be improving there are still considerable headwinds that could stall the recovery. Although Cyprus is only a small nation, it did cause global investors to pause, with some taking the opportunity to lock in profits and sell equities. 

So what can we expect for Quarter 2? Well I think there is still a demand for equities from investors, coupled with a bearish view on developed world debt, particularly government debt, and as such I expect money to continue to flow into equities, and any dip maybe seen as a buying opportunity (buying on the dips) for investors. Although I expect equities to advance further, I do think there will be volatility along the way, and one must have a strategy to manage this. If you take a long term view, then this short-term volatility may not be an issue; others however may look to using hedging techniques to help manage volatility. I think we will continue to see QE from the US, UK and Japan which should be favourable for equities and I also expect rates to remain unchanged, given both inflation and growth is still low.

Q1 has hopefully been a profitable quarter for you as an investor and hopefully Q2 will be similar. However it is important to be aware of the headwinds and position your portfolio accordingly.