Q: What drove market volatility in 2018 and how did it affect fund performance overall?
Tony Finding: The main driver behind the rise in equity market volatility in the first three months of 2018 was the reintroduction of valuation risk, stemming from the upward movement in US interest rate expectations.
In other words, investors grew anxious of the prospect of rising rates and how this might put pressure on equity valuations. When cash rates become more attractive, investors can begin to seek higher compensation for holding other assets and this can cause their price to fall. This lay behind much of the turbulence across global stockmarkets in February and October.
Please note that the value of investments and the income from them will rise and fall. This will cause the fund price, as
well as any income paid by the fund, to fall as well as rise. Changes in currency exchange rates will also affect the value
of your investment.