INVESTMENT ADVISER | ISSUE 09 2024 43
Going back to the start of this article , we will have both an economic and an investment story in the future . The recent investment story has been about AI , which is undoubtedly going to change the world in the same way that the Internet , railways and the light bulb . AI will be transformational through productivity gains and therefore economic growth . But as a pure investment story , AI has to some extent already played out and is the new economic story .
The next investment story is the rotation of equity markets from the US to other parts of the world . This is where to look for diversification going forward .
What does this mean for the positioning of the Liontrust Multi-Asset funds and portfolios ? Actually very little because we are happy with the diversification we have already . Let ’ s go back to the start of August to explain why . The volatility index ( VIX ) – which is the index of fear and greed – passed 65 on the way up in early August . The significance of this is shown by the fact that the last times the index was as high as 65 was during Covid and the Global Financial Crisis ( GFC ).
It is easy to understand why volatility was so high during the GFC and Covid as we did not really know what the economy was going to do the next day . However , at the beginning of August 2024 , we could not see how the economic environment had changed very much . We knew the US economy was slowing down . We knew at some point the yen was going to weaken and the Bank of Japan was going to put up interest rates . And yet when the central bank did by 25 basis points , what an impact this had on markets ! The market movements and volatility were purely sentiment driven .
We believe what you have to do in investment is to focus on the signal , which are the fundamentals of markets and stocks . This summer there have been no changes in the fundamentals . If there is no change in the fundamentals , then stick with your portfolio and let compounding do the work .
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This marketing communication does not form part of a direct offer or invitation to purchase securities . Before making an investment decision , you should familiarise yourself with the different types of specific risks associated with the Funds and Model Portfolios managed by the Multi-Asset Team . Any decision to invest should be always based on the relevant brochure . It contains important information which should be read before investing in any portfolio and they can be obtained free of charge directly from Liontrust or from www . liontrust . co . uk . This advertisement is a financial promotion under the Financial Services and Markets Act 2000 which has been approved and issued by Liontrust Fund Partners LLP ( 2 Savoy Court , London WC2R 0EZ ), authorised and regulated in the UK by the Financial Conduct Authority ( FRN 518165 ) to undertake regulated investment business in respect of content related to the Liontrust Multi Asset Funds , and Liontrust Investment Partners LLP ( 2 Savoy Court , London WC2R 0EZ ), authorised and regulated in the UK by the Financial Conduct Authority ( FRN 518552 ) to undertake regulated investment business in respect of content related to the Liontrust Multi-Asset Model Portfolios .