July 2024 Investment Summary

A positive month for the Passive range with returns ranging from +0.35% for Passive 5 to +0.89% for Passive 1.
P Acc share class with data sourced from FE analytics as at 31 July 2024.

July 2024 was a modest month for portfolios generally.

Most major equity markets rose in July led by the US, Asian and emerging markets. The Nasdaq and S&P 500 climbed further on the previous month, despite seeing a sharp rotation from growth to smaller-cap value stocks which are more sensitive to interest rate cuts. Real estate, utilities and financials led the sector-wise performance while technology lagged. The FTSE 100 performed well following Labours general election win, Stoxx Europe 600 edged up over the month as no outright majority was achieved in France’s parliamentary election. European markets have held steady to date post the election result.

US labour market government data this month softened showing payrolls increased by 114,000 in July, considerably lower than forecasts and down from the previous month. However evidence of the US labour markets resilience was seen with smaller than expected unemployment benefit increases, while US retail sales measuring the quantity of goods bought, rose more than expected. Consumer confidence dropped to an eight-month low in July, as households remain concerned over the impact of stubborn inflation on their pay checks. Unemployment data ticked up again slightly to 4.3% from 4.1% and to its highest level since October 2021.

Tensions in the Middle East continue as fears over an all-out conflict remain intensified after Israel targeted Hizbollah and Hamas leaders in Beirut and Tehran. Senior EU diplomats are holding critical talks in Iran’s capital as White House officials have held discussions in Saudi Arabia. The conflicts Impact remains limited on the global economy. Brent Crude prices have fallen to $81/barrel from $86/barrel in July.

Central banks are warming to the idea of rate cuts. Investors and central banks continue to focus on key data points that could provide insight into the relative health of economies, while corporate earnings will be in focus as well.

WS Prudential Risk Managed Passive - Tactical asset allocation activity

Our equity position is currently +1.25%, made up of a diversified basket across the US, UK, Asia and GEM. This is funded from a small European credit and cash underweights, with an overweight to US Treasuries.

Emerging Markets

The fund invests in emerging markets. Generally less well regulated than the UK. There is an increased chance of political and economic instability with less reliable custody, dealing and settlement arrangements. The market(s) can be less liquid. If a fund investing in markets is affected by currency exchange rates, the investment could either increase or decrease. These investments therefore carry more risk.

High Yield Bonds

The fund invests in high yield bonds. High yield bonds carry a greater risk of default than investment grade bonds, and economic conditions and interest rate movements will have a greater effect on their price. Income levels may not be achieved and the income provided may vary.

Value of Investments

The value of investments, and any income can fall, as well as rise, so you could get back less than you invested. Neither capital nor income is guaranteed.

Investments Long Term

Investments should be regarded as long term and are not suitable for money which may be needed in the short term, you should always have a sufficient cash reserve.

Property

The fund invests in Property funds, property shares or direct property. In particular the following risks will apply:- The property market is illiquid and this can, in exceptional circumstances, lead to times in which clients are unable to dispose of part or all of their holding. Property valuations are made by independent agents but are ultimately subjective and a matter of judgement. Property transaction costs are high (typically around 7% due to legal costs, valuations and stamp duty)

Derivative Exposure

The fund invests in derivatives as part of its investment strategy, over and above their use for Efficient Portfolio Management (EPM). Investors should be aware that the use of these instruments can, under certain circumstances, increase the volatility and risk profile of the Fund beyond that expected of a fund that only invests in equities. The fund may also be exposed to the risk that the company issuing the derivative may not honour their obligations which in turn could lead to losses arising.

Umbrella Liabilities

If the liabilities of one fund were to exceed its assets, the other funds within the scheme might have to transfer across money to cover the liabilities.

Solvency of Bond Issuers

If the fund you choose invests in bonds there is a risk that the issuer may default, resulting in a loss to the portfolio.

Returns Are Not Guaranteed

What you receive when you sell your investment is not guaranteed; it depends on how your investments perform.

Inflation

Inflation will reduce the real value of your investments in future.

Taxation and Tax Relief

Levels of taxation and tax relief are subject to change.