Multi-Asset

Has economic data really changed so much as to suggest an inflection point on inflation and the growth outlook was near? To some degree perhaps, at least in the eyes of the market, but not enough in the end for central banks to meaningfully change their guidance.

October was a tough month for the New Zealand bond market with yields rising in anticipation of further increases in cash rates and in response to global markets bracing for the possibility of central banks reducing stimulus by tapering bond purchases.

The New Zealand stock market has been flat in the calendar year to date, with companies working to adapt to a number of risk factors. This puts it in stark contrast with markets in the rest of the developed world, which have seen gains ranging from 10% to 25%.

Volatility has arisen as we expected it eventually would, and September is often an apt month to rediscover risk given market participants’ return from summer vacations noting that record high equity markets do not quite square with a number of significant risk events on the near-term horizon.

The equity market reaction to New Zealand’s second COVID-19 lockdown has been far more muted than the first time similar restrictions were imposed. The first lockdown from March 2020 caused an aggressive sell-off as investors and companies alike adjusted to a completely unprecedented situation.

Since the Reserve Bank of New Zealand (RBNZ) postponed a widely expected rate hike in August, pricing in the market has pulled back, supporting a view that the central bank will hike rates by 25 basis points (bps) at each of its next three policy meetings.

We have found most surveys classify the Multi-Strategy Fund as ‘growth’, which is somewhat ironic given that it isn’t ‘growthy’ enough to warrant more than a 5% weight in the growth fund.

It is well known that issues of fees, complexity and illiquidity are reasons often used to dismiss investment portfolios that include hedge fund strategies.

The short answer is: it depends on the hedge fund you are looking at, and how they’re implemented to a wider KiwiSaver portfolio.

Inflation is on everyone’s mind. From central bankers to bakers, it is one of the biggest topics of discussion. The prices of many commodities are rising sharply. The reasons vary. Supply constraints, sharp rise in demand or bad weather—take your pick.