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GDIM Investment Market Review & Outlook | April 2022

The first quarter of 2022 has been dominated by the Russian invasion of Ukraine, and the large scale humanitarian crisis that it has caused.

The economic impact has been felt worldwide but particularly in Europe, where they are far more reliant on Russian gas and oil. There has been increased optimism lately that a deal between Russia and Ukraine could be reached, with Russia indicating that they will dramatically scale back its military operations in Ukraine.

Inflation has also been surging, led largely by fuel and energy price increases, but also affecting raw materials and consumer goods in a significant way. Central banks felt the need to act with both the US Federal Reserve and the Bank of England raising interest rates by 0.25% at their March meetings, and more rate rises are expected in the coming months.

COVID has moved out of the spotlight lately, and while much of the developed world has loosened restrictions, the recent lockdowns in China have reminded us that the crisis might not be over just yet.

We expect that markets will continue to be volatile and inflation will continue to run high. With this in mind, we retain a high degree of protection in our portfolios and focus our equities on companies that make real, sustainable profits and can perform well in this environment. Looking further ahead, a significant slowdown in global growth could lead to recession. All major nations should be able to avoid it, although some may come close. Despite this, there are still plenty of opportunities, especially in areas we know are going to be crucial moving forward, such as healthcare and renewable energy.

We retain a focus on long-term asset allocation within the Investment Model Portfolios and are ensuring these remain aligned to the selected risk approach in order to work well with your individual financial plans.