Equity markets ended the third quarter in negative territory, with an August correction triggered by a sharp sell-off in the Chinese equity market. We believe the markets overreacted, especially since the slowdown in China was already in the offing from previous figures. Markets across the board were affected, but by October, we saw a strong rally in equity markets and most indices were able to recoup the losses of the third quarter.
This is merely one example of how quickly the tide can turn. Times are changing and investors need to start looking beyond the traditional bond and equity portfolios.
An increasing number of analysts and experts have expressed growing concerns over the makeup of the global economy and financial markets, and we too have our reservations regarding the outlook in the next few years. We have begun to gradually adjust our allocations to account for that outlook by increasing our investments in alternative investment strategies.
In this issue of BFI InSights, we’d like to share the logic behind the change and the approach we are taking.