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Global equity markets have made headway in the first half of 2019, the MSCI World index has advanced 19.6% in the year to date and the Lindsell Train Global Equity fund has bettered that with gains of 24.8%.

Looking ahead, there are some signs of a slowdown in global economic growth, although the US economy remains at full employment. However, equity markets have so far been sustained by indications that interest rates and inflation will remain low for the time being.  We remain relatively cautious based on political uncertainties including the date and terms on which Britain will exit the EU and the ongoing trade dispute between China and the US. We continue to run portfolios which are well diversified globally to minimise the impact of spikes in geopolitical risks.

To date the US has imposed tariffs on US$250 billion worth of Chinese products, and has threatened tariffs on US$325 billion more in order to deliver on Trump’s pledge to revitalise the US manufacturing industry. One notable recent development was the ban on US companies from selling components or software to Huawei without government approval. Whilst the US has to protect its intellectual property, refusing to trade with a company which is set to be pivotal in the development of global 5G communication networks shows the depth of the issues to be resolved.  

One bright spot for global markets and our model portfolios has been the healthy growth in dividends seen so far in 2019 with the Janus Henderson Global Dividend Index advancing 7.5%, fuelled by some large special dividend payments and positive currency effects. Of particular interest is that Asia is becoming a hotspot for dividend payouts. The region has seen the world’s strongest dividend growth since 2009, thanks to rising profits and so far this year dividend payments in the region are up 14.7%. This is good news given our inclusion of both Asia Pacific and Emerging Markets income strategies in our portfolios.

This article is for information purposes only. It does not constitute investment advice and is not a recommendation for investment. The value of your investment and the income from them may go down as well as up and you could back less than you invested.  Past performance should not be seen as an indication of future performance.

Date of publication: 4 July 2019

 

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