Welcome to October. Last month saw a pause to the market’s post-March rally as tech stocks hit a rough patch and fears over the impact of a renewed wave of coronavirus infections globally continued to weigh on investors’ minds.

As always through this monthly update, we’ll give you an idea of what’s happening, how investments are performing and what this all means for you.

So, what happened in the markets last month?

• Big tech stocks saw a slowdown before recovering towards the end of the month. The Nasdaq, a US index focused on the tech industry, dropped by more than 5% as investor concerns grew over inflated performance expectations and fears of another dot-com bubble.
• Brexit talks stalled as the European Union demanded that the UK withdraw proposed legislation that would override parts of the Brexit withdrawal agreement.
• Investors have turned their attention to how markets will react to US election results after the first televised debate and this week’s news of President Trump being diagnosed with coronavirus.

And how are investments performing?

Growth in global markets fell in the first half of September before recouping the majority of their losses by month end. In the UK and EU stocks were most significantly impacted by further government restrictions - with travel and tourism hit particularly hard.

At Wealthsimple, all our Socially Responsible portfolios and Conservative portfolios saw modest gains. Growth and Balanced portfolios were slightly down for the month.

• This month's best performer? The Japanese equities investment returned 6% across the month. Japan’s equity market rebounded this month after dipping in August from news of the country’s Prime Minister stepping down. The market also benefitted from high-profile investments in the region which encouraged positive investor sentiment.
• This month's worst performer? The GBP Hedged US equity investment fell by -4.83% over the month. Lacklustre US stock performance and the rise of the US dollar made it a challenging month for currency-hedged investments in the region. Last month this fund was the best performer, growing by 7.31%, showing the importance of keeping a long-term lens when it comes to how assets are performing.

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

Anyone still brave enough to read news on the economy these days could be excused for feeling, well, a bit glum. And yet the stock market has done seemingly well since March’s downturn. You may ask, if the economy is crumbling why are stock markets doing just fine? The answer: because the stock market isn’t the scoreboard for the health of the economy.

While the health of the economy can be complicated to decipher, the health of your finances is pretty simple to check. How? We’ve created a simple financial fitness checklist for you. It’s called The Waterfall Method and includes six important steps that make sense whether your income has taken a hit this year or you’ve seen a windfall from pandemic savings.

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