The Navigator – Anchor’s Strategy and Asset Allocation, 1Q23

The Navigator – Anchor’s Strategy and Asset Allocation, 1Q23

The Navigator is Anchor’s quarterly review of the major themes affecting markets and gives an overview of our current strategy and asset allocation. Click here for the full document.

The purpose of The Navigator is to provide our clients with insight into Anchor’s thoughts on various asset classes and our near-term market outlook.

Last year hurt with global equity and bonds returning negative outcomes, while domestic equity and bonds returned a disappointingly small positive outcome. Platitudes like the worst bond market since records began, inflation spiking to levels last seen 40 years ago, rotation towards value and equity market corrections do not capture the reality that most investors lost money in 2022. Whether this is part of your long-term nest egg, a child’s education fund, or an endowment does not matter. Last year was one where investment plans did not work out.

Much of the investment landscape has changed over the journey of 2022. Inflation is now broadly considered to have peaked, central banks have signalled an intent to slow the pace of interest rate hikes, and many investments (both equities and bonds) are offering entry prices that have not been seen for over a decade. Just after a market crash is usually a good time to invest, particularly if you anticipate an eventual economic recovery. However, it is too early to say that this is over, and the consensus is that the next six months will be telling for the globe.

In this context, investors should be thinking about how to add risk and when to phase it in. Of course, the road ahead will have speed bumps along the way; however, the outlook over the long term is increasingly positive, and while it might feel uncomfortable right now, we should be thinking about how to take advantage of the opportunities that are appearing.

We have seen a strong start to January 2023, which evidences the adage that you cannot afford to be out of the markets; you do not know when markets might pop. Missing these couple of strong up-days can have a significantly detrimental effect on your long-term outcome.

We continue to caution that now is not the time for wholesale changes to your portfolios. The risk of such changes resulting in permanent losses is too high. However, over time, if you need to adjust your risk tolerances, then a gradual and patient approach towards such changes is warranted. Therefore, we continue to advocate for asset class diversification domestically and abroad.

As you will see in this document, we look forward to a better 2023.

The key to successful management of your wealth is understanding the changes to the world in which we live and adjusting (when necessary) your investment portfolios accordingly. As a boutique asset manager, we can navigate these twists and turns of global developments more readily. Our team of experienced investment professionals are ideally suited to understand and react to a rapidly changing environment as we pursue exceptional investment outcomes for our clients.