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Our views 04 January 2023

2022 and Q4 review: A painful year for balanced funds

5 min read

Passively managed balanced funds blending stocks and government bonds performed strongly in 2020 during the initial deflationary Covid shock, but were hit hard in its inflationary aftermath with both asset classes dropping sharply over 2022.

Our more diversified mix, with inflation hedges like commodities and a lower fixed income exposure, proved more resilient.

Stocks and bonds started 2022 egregiously overvalued, with cyclically adjusted US price earnings multiples at their highest level since the dot com bubble and government bonds offering negative real yields. Both markets plunged as central banks belatedly moved to tighten policy to counter surging inflation.

Read in full: A painful year for balanced funds

This is a financial promotion and is not investment advice. Past performance is not a guide to future performance. The value of investments and any income from them may go down as well as up and is not guaranteed. Investors may not get back the amount invested. Portfolio characteristics and holdings are subject to change without notice. The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.