Here’s our update on what's been happening in the markets, as well as recent tactical changes we've made, and how our range of Ready-made Investment Funds are performing.
Remember the value of investments can fall as well as rise. You may not get back what you invest. We're not recommending Ready-made Investments as being suitable for you based on your personal circumstances, nor do we offer personal financial advice.
If you're unsure about this investment’s suitability for you, or you’re not confident about making your own investment decisions you should seek independent advice.
The final quarter of last year started off on shaky ground, as shares sold off and government bond yields rose during the first few weeks. However, market dynamics changed rapidly following a set of events. The US Treasury department surprised investors by announcing a slower pace at which it will issue longer-dated debt, pushing global government bond yields lower.
The December Federal Open Market Committee meeting provided the setting for Chair Jerome Powell to allude not only to the end of the interest rate hiking cycle but also to the possibility of a not-too-distant reduction in interest rates. This was because inflation had normalised ahead of the US Federal Reserve’s expectations.
Markets were comfortable that central banks were close to finishing their hiking cycles but cautious about how long rates would remain at restrictive levels. There was growing excitement that central banks globally will cut interest rates sooner in 2024 than previously expected, resulting in an ‘almost everything rally’ across both cyclical (i.e. assets which move in line with the market cycle) and more defensive asset classes.
US share performance rotated from being led primarily by the so-called ‘Magnificent Seven’ tech companies1 to a broader set of companies. Meanwhile, Japanese shares, having been a top performer for most of the year, took a breather as Bank of Japan policy continued to diverge from the rest of the developed world.
Credit markets saw the difference in yield between government and corporate debt of comparable maturity (the ‘spread’) tighten across US high yield and investment grade, as well is in emerging market (EM) debt, as the risk for higher funding costs declined. In EM, Latin American central banks in particular proceeded with interest rate cuts way ahead of their developed market counterparts.
Our Strategic Asset Allocation (SAA) is our mix of shares, bonds, and cash designed to give you the best portfolio outcome for the long term. Our Tactical Asset Allocation (TAA) is the process where we actively deviate from our SAA, in order to take advantage of short-term investment opportunities.
In the last three months of 2023, we reduced our exposure in global shares, and added to cash and government bonds where appropriate. We think that the US economic growth outlook (i.e. the engine of global growth) is set to deteriorate as growth is weakening, and investment sentiment (as measured by our in-house indicator) is overly optimistic, potentially setting the stage for poor share performance.
We also increased our funds’ exposure to developed market (ex-Japan) government bonds, and reduced our allocation to cash and short-dated government bonds where appropriate. This was driven by our conviction of strong disinflation – in other words, the slowing of the pace of price inflation – and the expectation of a shift in central banks’ monetary policy towards rate cuts.
You can relax in the knowledge that we will continue to monitor and manage your Ready-made Investments and we’ll update you regularly on their performance and any changes we’ve made. Of course, if you’d like to see the latest performance of your investments simply log-in to your Smart Investor account any time.
This Ready-made Investment takes a low-risk approach, aiming for modest growth in the value of your investment in the medium to long term, while seeking to protect your capital. Its approach is to invest in a blend of passive funds giving you access to different asset classes from around the world. It invests mostly in cash and bonds, with some exposure to shares, mostly in developed markets.
|
Year from 31 December |
2022-23 |
2021-22 |
2020-21 |
2019-20 |
2018-19 |
|---|---|---|---|---|---|
|
Fund (net) |
7.17 |
-10.74 |
3.03 |
4.68 |
6.06 |
|
1 Month |
3 Months |
6 Months |
1 Year |
3 Years p.a. |
5 Years p.a. |
|---|---|---|---|---|---|
|
2.52 |
4.41 |
4.25 |
7.17 |
-0.48 |
1.82 |
Source: Morningstar as at 31 December 2023
The table shows the performance of the accumulation units of the fund, on a total returns basis. Past performance of investments is not a reliable indicator of their future performance.
This Ready-made Investment choice means you’ll be taking more risk than Barclays Wealth Growth Markets 1. It aims to achieve better returns than cash over the longer term, but also seeks to reduce the risk of significant capital loss. It still has a high exposure to lower-risk assets, investing largely in bonds but also gives some exposure to shares, primarily developed market shares.
|
Year from 31 December |
2022-23 |
2021-22 |
2020-21 |
2019-20 |
2018-19 |
|---|---|---|---|---|---|
|
Fund (net) |
8.69 |
-10.59 |
5.08 |
6.73 |
11.05 |
|
1 Month |
3 Months |
6 Months |
1 Year |
3 Years p.a. |
5 Years p.a. |
|---|---|---|---|---|---|
|
3.32 |
5.66 |
4.89 |
8.69 |
0.70 |
3.89 |
Source: Morningstar as at 31 December 2023
The table shows the performance of the accumulation units of the fund, on a total returns basis. Past performance of investments is not a reliable indicator of their future performance.
With this Ready-made Investment choice, you’re taking a moderate level of risk to seek long-term growth. There’s more exposure to riskier investments than in our lower risk profile Ready-made Investments, but it’s still well diversified to try to mitigate some of that risk. At this level, short-term changes in value are more likely and while you’ll be invested in both bonds and shares, it’ll lean more towards the latter.
|
Year from 31 December |
2022-23 |
2021-22 |
2020-21 |
2019-20 |
2018-19 |
|---|---|---|---|---|---|
|
Fund (net) |
11.14 |
-9.74 |
8.74 |
8.25 |
14.68 |
|
1 Month |
3 Months |
6 Months |
1 Year |
3 Years p.a. |
5 Years p.a. |
|---|---|---|---|---|---|
|
3.68 |
6.11 |
5.82 |
11.14 |
2.94 |
6.25 |
Source: Morningstar as at 31 December 2023
The table shows the performance of the accumulation units of the fund, on a total returns basis. Past performance of investments is not a reliable indicator of their future performance.
This Ready-made Investment takes a moderate-high approach to risk, aiming to generate higher growth than our lower risk options. To offer the potential for bigger rewards, it introduces more risk, which also means more chance of experiencing losses. It invests largely in shares, making up more than half of your investment and while it still gives some exposure to lower-risk investments like bonds, they’ll be a smaller section of your overall investment.
|
Year from 31 December |
2022-23 |
2021-22 |
2020-21 |
2019-20 |
2018-19 |
|---|---|---|---|---|---|
|
Fund (net) |
12.40 |
-8.81 |
12.46 |
9.10 |
17.43 |
|
1 Month |
3 Months |
6 Months |
1 Year |
3 Years p.a. |
5 Years p.a. |
|---|---|---|---|---|---|
|
3.71 |
5.84 |
5.84 |
12.40 |
4.86 |
8.11 |
Source: Morningstar as at 31 December 2023
The table shows the performance of the accumulation units of the fund, on a total returns basis. Past performance of investments is not a reliable indicator of their future performance.
With this Ready-made Investment you’re taking a high level of risk, seeking to achieve substantial long-term growth. Most of the holdings will be in higher risk investments and you may experience considerable day-to-day fluctuations in value. As you’re chasing bigger rewards, there’s also a bigger chance of experiencing losses. With this option, significantly more than half of the fund will be in shares and although there’s some exposure to fixed-income investments, it’s mostly in emerging markets bonds.
|
Year from 31 December |
2022-23 |
2021-22 |
2020-21 |
2019-20 |
2018-19 |
|---|---|---|---|---|---|
|
Fund (net) |
13.03 |
-8.35 |
15.24 |
9.86 |
18.80 |
|
1 Month |
3 Months |
6 Months |
1 Year |
3 Years p.a. |
5 Years p.a. |
|---|---|---|---|---|---|
|
3.68 |
5.49 |
5.95 |
13.03 |
6.09 |
9.28 |
Source: Morningstar as at 31 December 2023
The table shows the performance of the accumulation units of the fund, on a total returns basis. Past performance of investments is not a reliable indicator of their future performance.
|
Fund |
Cash & Short Maturity Bonds |
Developed Government Bonds |
Investment Grade Bonds |
High Yield & Emerging Market Bonds |
Developed Markets Equities |
Emerging Markets Equities |
|---|---|---|---|---|---|---|
|
Global Markets 1 |
66.0 |
4.0 |
10.0 |
2.0 |
13.0 |
5.0 |
|
Global Markets 2 |
33.0 |
5.0 |
22.0 |
2.0 |
27.0 |
11.0 |
|
Global Markets 3 |
2.0 |
7.0 |
33.0 |
2.0 |
40.0 |
16.0 |
|
Global Markets 4 |
2.0 |
5.0 |
18.0 |
2.0 |
51.0 |
22.0 |
|
Global Markets 5 |
2.0 |
3.0 |
4.0 |
2.0 |
61.0 |
28.0 |
Please note: The actual asset allocation may deviate from those weights shown due to intentional shifts we make to take advantage of short-term opportunities and risks, as we see them.
You can buy your Ready-made Investment using an existing account.
You can choose from two types of account. Once your account is open, you can buy your chosen Ready-made Investment.
The most popular account people choose when they start to invest.
You can pay in up to £20,000 per tax year into our award-winning ISA.
Any returns you make are tax free.
Tax rules can change in future and their effects on you will depend on your indvidual circumstances.
A flexible account if you’ve already used your ISA allowance for the current tax year or you’re already paying into an ISA with another provider.
No limits on the amount you can invest.
The return you make on your investments will be taxable but there are allowances that may mean you don’t pay tax, or it's reduced.2
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