Market Update – Year to date
Challenging first half to the year
Traditional investing is typically based on the foundation that different asset classes will characteristically perform differently over any given period. This is one of the main premises for constructing a well-diversified investment portfolio. At its simplest, this assumes a decline in shares will be countered by a gain in bonds (and vice versa), which will help to limit the volatility experienced in portfolios. For investors with a balanced portfolio, this typically means a smoother ride, with one of their asset classes performing well in any given time, regardless of wider market and economic conditions.
However, this has not been the case for investors year-to-date in 2022, as highlighted by the chart above. There have been falls in both bond markets and domestic and international equities, along with most other asset classes, including New Zealand property. Whilst recent volatility is disconcerting, it is important to keep in mind that market volatility is simply a part of investing.