February 2020 Market Update

Welcome to the February edition of your monthly market update. Through this update we keep you in the loop on on what happened in markets last month and what it means for you (and your money).

So, what happened in the markets last month?

• The markets opened the new decade with record highs on the first day of trading but momentum was quickly drowned out by the escalation of tensions between the U.S. and Iran after the killing of Iranian Major General Soleimani
• China and the U.S. signed the first stage of their trade deal and Prime Minister Boris Johnson signed the Brexit withdrawal agreement for the U.K. to leave the European Union on 31st January. Both events led to January’s market highs. Why? Likely because investors are hoping for greater stability after months (and years) of negotiations and discussion
• The outbreak of Coronavirus at the end of the month triggered fears over how an extended epidemic could impact the global economy. In reaction demand for natural resources dropped over the course of the month - with sales of oil falling by 25% in China

And how are investments performing?

• This month's strongest performer? The UK Gilt holding, was the best performing investment across the month, up 3.86%. Perceived clarity around Brexit and investors choosing to sell equities and buy bonds led to increased demand
• The worst performer? The Emerging Market equity holding was down by -4.24% across January. Why? Emerging market funds are typically the most sensitive to global economic ups and downs

Lastly, what does all this mean for me and my money?

In January it was hard for a day to go by without reading an alarming newspaper headline on your daily commute. The month started with World War 3 trending on twitter and ended with the World Health Organisation (WHO) declaring Coronavirus a global health emergency.

It can be tempting to react when markets move. But, smart investors know that the key to success is drowning out the daily news and keeping focused on your long-term financial goals. And the good news is that the long term has been historically much easier to predict.

The bottom line: you’ve heard it from us before, and you’ll hear it from us again. The best way to reduce risk is by being invested in a globally diversified portfolio and automating your finances where you can - like setting up a monthly direct debit from your pay cheque. Daily headlines will come and go but by sticking to your plan, when the market is both up and down, you are setting yourself up for a stronger financial future.

That’s all for now but if you have any questions you can always reach out to support@wealthsimple.com or book a call with a member of our investment team here.

Take care,

James

Investment Adviser

Wealthsimple