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Moneyfarm’s performance in 2023: mid-year review

The first half of the year has been particularly positive for investors. We have seen major economic factors move in the direction analysts had hoped for: inflation has decreased, economic growth has slowed without entering a recession, major central banks appear to be nearing the end of the interest rate hike cycle and the deadlock on the US public debt ceiling was resolved before a potential default. One thing that fewer people would have expected is the strength of the stock market recovery. The S&P 500 index has grown by over 13% since the beginning of the year (data as of 14th June), while the Euro Stoxx 50 has grown by approximately 12.5%. The Nasdaq, which includes major US technology companies, has grown by over 30%, driven by a handful of large-cap stocks. Bond markets have also contributed positively to performance, although they have not fully transferred the benefit of higher rates on to investors in terms of coupon flow.

The year-to-date performance allows those who remained invested to look ahead to the coming months with greater confidence. If you are interested in opening an investment portfolio, remember that you can schedule an appointment with one of our consultants.

Past performance is not a guarantee of future results. All investments can go down as well as up.

Moneyfarm portfolios’ performance

In this context, Moneyfarm portfolios have recorded positive performance across the board. Performance depends on the level of portfolio risk (measured through realised volatility). Portfolios with a higher equity allocation, such as P7, are suitable for investors with a greater risk appetite. As shown, performance has been particularly positive for portfolios with a higher equity allocation.

Past performance is not a guarantee of future results. All investments can go down as well as up.

Performance since inception is annualised, inception date is 01/01/2016,  performance is gross of fees.

Socially responsible investments outperformed

Good news has also come for those who chose socially responsible portfolios. With the price of oil and hydrocarbons decreasing in the first half of the year, investment lines that consider ESG factors have outperformed traditional investment lines.

Past performance is not a guarantee of future results. All investments can go down as well as up.

3 years performance is annualised,  performance is gross of fees. For p7, the returns shown refer to simulated past performance of our model portfolios since inception (01/01/2016), this portfolio only became available to clients on 16/05/2019. Past performance is not an indicator of future results.

Thematic investments: Technology in the spotlight

The novelty of 2023 has been the inclusion of investments in mega-trends: a solution through which investors can personalise their portfolio by choosing to invest a portion of it in one of these trends. These lines have higher expected long-term returns and volatility compared to traditional investments. In the first half of the year, the Technology and Innovation portfolio has been in the spotlight, achieving a launch performance of over 15%.

Past performance is not a guarantee of future results. All investments can go down as well as up.

3 years performance is annualised, performance is gross of fees. The 3 year shown partially refer to simulated past performance of our model portfolios. Past performance is not an indicator of future results.

How can we explain the rally?

The rally that characterised the first months of 2023 can mainly be explained by three factors:

  • Inflation, which, although slowing down more gradually than expected, has come under control, at least in the United States and Europe.
  • The resilience of the economy, which is weathering interest rate hikes without causing a severe recession.
  • The outperformance of technology stocks, especially those related to artificial intelligence.

What happens next?

Certainly, in the second half of the year, we may witness an economic slowdown, also driven by the dynamics of interest rates. However, looking at the data, the possibility of a soft landing is still tangible, although it is definitely too early to declare victory. Nevertheless, we can enjoy the partial recovery of the markets and look to the future with cautious optimism, thanks to the positive performance of equities over this period, higher bond yields compared to the past 10 years, and a monetary policy that is expected to have nearly reached the peak of its tightening phase. These outcomes were not certain, and they allow us to face the coming months with greater confidence.

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