Investment Committee Meeting Update (July 2022)
Model Thinking posted on July 22nd, 2022 11:53:01 AM by Jonathan Wu
Overview: The investment committee met in July 2022 and decided no changes were required to your existing portfolio.

Financial markets continue to act irrationally given continued high inflation readings across most developed markets leading to even higher and sharper interest rate increases. This has thus heightened the level of uncertainty triggering an equities bear market. For actively managed portfolios like the ones of SWU Online Invest, current market conditions have presented opportunities to pick sectors which have corrected and once markets become rational again have a higher probability of outperforming broader indices.

Bond markets have also suffered heavily for the first half of 2022 with almost all sectors falling by around 10% due to rising interest rates. Through this period we have maintained a lower strategic allocation to bonds which have seen the portfolios to perform relatively well. Given the selloff in bonds, the investment committee is now actively considering a potentially higher allocation as yields have risen and have become attractive for the first time in years.

Chinese equities on a relative basis are showing compelling valuations and over the first half of this year was clearly a tale of 2 cities. It was the worst performing asset class globally for Q1 and in Q2 was the best performing.

While volatility remains high, corrections in investment markets are part and parcel of long term wealth generation and the investment committee reminds our investors, as long as your not a forced seller (meaning you do not need your money today), then focus on your long term investment goals.