Global equity – particularly passive funds – have proved popular as an easy instant cross-market exposure in a market where making a tactical call is tough, according to Emma Wall, head of investment analysis and research at Hargreaves Lansdown.
Wall said Investors should be mindful, however, as past performance was no guarantee of future returns, particularly when a market had been so driven by momentum.
She added: “Year-to-date, most of the returns in US, and indeed the global aggregate equity market, have been led by just seven stocks this year. At some point, this run will end. Whether the trigger is recession, stock-specific, political or oil price – the nature of a hyped market is it is sensitive.
“We have seen this [last week] thanks to higher-for-longer rhetoric from the Fed monetary policy committee.”
Wall said the market was currently pricing a ‘Goldilocks scenario’, which was not guaranteed to deliver.
She added: “The likelihood is that over the course of the next 12 months, equity markets will rebalance, yields will fall and bond prices will rise.
“It is therefore important that investors remain diversified across asset classes and geographies, so they are best placed to ride out any market scenario when it comes.”
