Historically, January has been seen as a barometer and positive leading indicator of future performance of the stock market, best encapsulated in the phrase ‘As goes January, so goes the year.’ The strength of the UK market, with the FTSE All-Share Index increasing by 5.5%, could therefore be taken as a good augury.
We certainly wouldn’t be against a stronger UK stock market and the clearest reason to believe returns could be attractive from here is that the valuation of the market as a whole, and of a number of companies in particular, makes it appear good value.
However, as we are well aware, there are also some dispiriting factors, as growth in the UK and European economies is proving hard to achieve. Furthermore, government bond yields in the UK increased sharply during January, with the 30-year bond yield trading at over 5.4%. To put this in perspective, it is the highest yield since 1998. It can broadly be interpreted as a sign that bond investors are sceptical about the fiscal policies of the Government and are demanding a higher return for this risk.
January also saw the inauguration of President Trump in the US. As a disruptor, President Trump looks set to shake-up many previously established ways of operating, not least of which is the re-imposition of an active tariff policy. Depending on the extent, amount and longevity of these, there is considerable potential for economic damage.
Our overall performance was broadly in line with the index over the month. A number of our investments performed very well, including our largest individual holding, Intermediate Capital Group (+14.7%). The group announced strong progress with its fundraising programme, which should drive future earnings growth
Investment risks
The value of your investments and any income from them can go down as well as up and you may not get back the original amount invested. Gearing is used for investment purposes to obtain, increase or reduce exposure to an asset, index or investment.
Issued by Columbia Threadneedle Management Limited and approved for distribution XX/XX/20XX.
Information in this section of the Website is directed solely at persons who are located in the UK and can be categorised as retail clients. Nothing on this website is, or is intended to be, an offer, advice, or an invitation, to buy or sell any investments. Please read our full terms and conditions and the relevant Key Information Documents (“KID”) before proceeding further with any investment product referred to on this website. This website is not suitable for everyone, and if you are at all unsure whether an investment product referenced on this website will meet your individual needs, please seek advice before proceeding further with such product.
