Sustainable Investing
As we are all aware, there now is a greater focus on ESG investing. Many clients can have very strong views on the particular types of investments that they want to invest in or avoid. This can be something that resonates with the client on a personal level, or maybe they just feel that they can make a small difference with their investments.
Because of the increased criteria that is placed upon investments to qualify as ESG, there are generally fewer underlying investments available to choose from.
Following new research at Morningstar, investors in Asia and Europe can invest in ESG without it affecting their risk exposure. Ronald van Genderen, CFA (Senior Manager Research Analyst) states the following: “This is because sustainable funds, whether active or passive, generally differ very little in size and style exposures to their conventional counterparts, thus providing a reassuring option for investors seeking to invest sustainably,”
Source: Switch to sustainable investing has minimal impact on risk exposure, says Morningstar
This is good news for ESG investors, as they can be safe in the knowledge that their portfolios can retain their diversification and not be weighted too far in one particular sector or region.
Investing in the ‘Magnificent Seven’
The Magnificent Seven is a group of stocks from high performing and influential companies in the US Stock Market. These companies are Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia & Tesla.
Over the past five years, these companies have demonstrated impressive performance, especially NVIDIA, which has achieved a remarkable return of approximately 3,000%. Each of these companies is deeply invested in technology and AI, positioning them at the forefront of their respective fields.
In addition to this, they are all companies with a strong brand recognition, which means that their customers are extremely loyal. This will likely lead to further growth in the future, a constant income stream and continued focus on technology.
These seven firms have dominated markets over the last few years. For example, 30% of the returns within the S&P 500 over the last year have come from Nvidia alone. While this performance is impressive, it does lead to questions about the future performance of these indices.
In their latest market update, IBOSS Asset Management state the following:
“This heavy reliance on one company’s performance should raise concerns about the of market gains driven by a narrow segment of stocks. The critical question is how long Nvidia can continue to drive the stock market higher or when it will trigger a downturn. The answer lies in the company’s future performance and market dynamics. While the AI sector’s growth potential remains robust, any adverse earnings reports or unforeseen challenges could significantly impact Nvidia’s stock price and, by extension, the broader market.”
Source: The Magnificent Risk?
US Politics
On 21st July 2024, current US President Joe Biden confirmed that he will no longer run for a second term in the upcoming elections. He has since backed Vice President Kamala Harris in her bid to become the Democratic Party presidential candidate.
While her appointment will not be confirmed until the Democratic National Convention on 19th August 2024, it is essentially a foregone conclusion that she will be given the nod.
In the week since receiving Joe Biden’s backing, her election campaign has raised $200m, of which 66% has come from new donors.
Prior to Joe Biden’s announcement, it was anticipated that Donald Trump would almost certainly be elected as the new President. However, polls now show that this is not necessarily the case, and the race is now much tighter than it previously was.
In their recent market update, Close Brothers Asset Management discuss the way these events affect the markets:
“Under a Trump victory, we expect to see an escalation of trade tensions with China, Mexico and Europe, as well as an attempt to extend the Tax Cuts and Jobs Act, with partial measures to fund the lower receipts this would entail. A Harris win could mean some of the measures proposed in Joe Biden’s original Build Back Better plan are followed through with, accompanying revenue measures.”
Source: Article display Close Brothers AM
The lead-up to the US election on November 5, 2024, promises to be a very interesting time. We will be closely monitoring this period to observe how the markets continue to react to the evolving political landscape.
As we navigate the exciting and unpredictable times ahead, particularly with the upcoming US election, staying informed and prepared is crucial. At We Complement, we pride ourselves on being your go-to technical experts. Our deep insights into market trends and technological advancements ensure you have the knowledge and strategies you need to thrive. Stay connected with us for expert analysis and advice, and let us help you navigate the complexities of the market with confidence. Get in touch with us today.