February 2018 will be remembered as the month when volatility finally returned to equity markets, as discussed in this month's newsletter. Despite this, the BOTB and my £50k portfolio fared comparatively well, down 1.70% and 1.48% respectively after markets rebounded from the initial sell-off. This compares to -1.65% from the average managed fund from the Mixed Investment 40-85% Shares sector and -3.40% for the FTSE 100.
If you look at the latest heatmap you can see that during February investment risk wasn't rewarded with strong returns. Somewhat unusually, but understandably, cash was one of the best performing sectors during the month. The 'cash is King' scenario was reflective of the sudden positive correlation between bonds and equities. Usually, when equities fall bonds tend to rise as investors seek haven assets. If you look at the sectors represented in this month's BOTB, and also the asset mix at the foot of this article, you will see that bond funds are conspicuous in their general absence.
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