Tiller investor update: December 2018


Global stock markets fell in December to finish off the worst year since the global financial crisis of 2008.

Worst hit were the US and Japan equity markets. Relative to other parts of the world, the US market had been more resilient until December. However, concerns over the Federal Reserve increasing base rates too quickly, the US-China trade war and a US government shutdown combined to drive investors into recession mode. By this, we mean all economic sensitive assets such as stocks, commodities and property fell. Assets which benefit from lower economic growth, such as government bonds, rose in value.

Emerging market stock markets suffered smaller losses than developed stock markets in December. Whilst the US market (the S&P 500 index) fell 9%, the MSCI Emerging Market index fell 2.6%. This bucked the previous trend. Over the full calendar year, the S&P 500 outperformed by only falling 4.4% – where the MSCI Emerging Market index was down 14.2%.

Some of the biggest daily moves happened in and around the Christmas period. You often observe larger moves around holiday dates, as the lower than usual volume of trades can cause exacerbated daily price moves.

Against such a tough backdrop, it was reassuring to see the expected diversifying assets increase in value and partial offset losing positions. UK government bonds and our two biggest alternatives funds (by position size) made positive returns in December.

Tiller portfolios had low single digital losses in December. The private client indices produced by ARC suggest that the average UK wealth management portfolio lost a bit more than the respective Tiller portfolio.


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