Trade, tariffs and treaties have dominated the financial news this year – and much of the political news too. Trade disputes between the U.S. and China, the Brexit negotiations between the U.K. and the E.U., and the NAFTA treaty talks all form part of this trend. But should investors be worried about what it means for them and their funds?
Investor sentiment. Sentiment is one of the quickest ways that economic and political changes can affect the markets and asset prices. Uncertainty or pessimism amongst investors can lead them to exit the market, move to “safer” or more defensive asset classes or, move away from a sector or industry that concerns them.
While trade concerns have depressed investor sentiment this year, it’s important to note that investor sentiment can be fickle and turn quickly – it is the short-term noise that is best tuned out of a long-term investing view.
Investment plans. When uncertainty is present, many companies may hold off on investing in expansions, new capabilities, or facilities until the future is clearer.
This has been widely reported in the U.K., where many firms have indicated that plans have been put on hold until they know the shape of post-Brexit trade agreements.
Structural changes. Changes to the terms of trade between countries and trading blocs can lead to changes in the amount and patterns of economic activity in those areas. The supply chains of some industries may be reconfigured. Some sectors may prosper under new rules; others may struggle. Structural changes can take years, even decades, to become clear. Investors should be careful about making rash investment decisions based on these long-term, unpredictable changes.
Mutual fund investors should keep in mind that the professional money managers of the funds are watching developments and taking into account the trends that may affect the investments they manage.
A disciplined investment plan, based on your goals and your time horizon, remains the best guide to good investment decision making. Let’s talk if you feel that it’s time to review your situation.
Larry Kleinmintz, R.H.U., T.O.T., M.D.R.T.
This newsletter is sponsored in part by Dynamic Funds. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performances may not be repeated. Dynamic Funds® is a registered trademark of its owner, used under license, and a division of 1832 Asset Management L.P.
This newsletter has been written (unless otherwise indicated) and produced by Ariad Communications.
© Ariad Communications. This newsletter is copyright; its reproduction in whole or in part by any means without the written consent of the copyright owner is forbidden. The information and opinions contained in this newsletter are obtained from various sources and believed to be reliable, but their accuracy cannot be guaranteed. Readers are urged to obtain professional advice before acting on the basis of material contained in this newsletter. Readers who no longer wish to receive this newsletter should contact their financial advisor. ISSN 1205-5840