Ellen Ward

The World In A Week - Unlocking Shareholder Value in Japan

Written by Ilaria Massei

Japanese equities rose last week, with the MSCI Japan Index up +1.0% in GBP terms, supported by a corporate development that highlights how governance reforms are continuing to reshape the investment landscape.

Corporate governance refers to how companies are managed, how decisions are made, how management behaves, and how shareholders are treated. Strong governance means that companies are more transparent, accountable, and disciplined in how they use capital - crucial elements for delivering long-term value to investors.

The key news came from Nippon Telegraph and Telephone (NTT), which announced plans to take full control of its listed subsidiary, NTT Data. NTT plans to purchase the remaining shares it doesn’t already own, offering a 35% premium over the stock’s closing price of the day before the announcement. This signals a shift in how shareholders are considered in Japan. In the past, similar deals were usually structured to favour the parent company, with little consideration for minority shareholders. Offers often came with minimal premiums - or even at a discount - and shareholder rights were frequently overlooked.

The NTT transaction is a strong example of how improved governance can unlock value for investors. It reflects the broader progress Japan has made over the past decade, following the introduction of economic reforms under former Prime Minister Shinzō Abe, who led Japan from 2012 to 2020. A key pillar of his "Abenomics" agenda was corporate governance reform, aimed at making Japanese companies more efficient, transparent, and shareholder-focused.

Developments like these in Japan highlight the importance of maintaining a globally diversified portfolio, as investment opportunities tend to emerge at different times across different regions.

Elsewhere, the UK also made headlines after finalising a long-anticipated trade deal with the US. While the baseline 10% tariff on UK goods remains, the agreement will remove tariffs on steel and aluminium (previously 25%) and provide reciprocal access for products like beef and ethanol. The UK car industry also welcomed a key outcome as tariffs on vehicle exports to the US will drop from 27.5% to 10%.

In a separate development, the Bank of England cut interest rates by 25 basis points to 4.25% as inflationary pressures continue to ease and concerns about slowing domestic growth come to the forefront. The rate cut didn’t lift the broader UK equity market, with the FTSE All Share Index ending the week slightly down (-0.1%). However, the FTSE 250 Index - made up of mid-sized companies that are more sensitive to the UK economy and interest rates - rose by +1.3%.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon.

The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.

The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments. 

All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 12th May 2025.

© 2025 YOU Asset Management. All rights reserved.

by Ellen Ward

The World In A Week - Warren Buffett’s lesson in the power of compounding

Written by Chris Ayton

The rebound from April’s “Liberation Day” equity market sell-off continued last week with the MSCI All Country World Index up +2.9% in GBP terms. The S&P 500 Index in the US closed the week up +2.8%, with Friday’s close the first time the index had enjoyed nine consecutive positive trading days since 2004. The US market was boosted by some resilient employment data; in reality, much of the data only confirmed things were broadly fine before the escalation of tariff-related uncertainty. Similarly, earnings results, which are also backwards-looking, have generally held up well. However, Apple’s shares declined after the CEO, Tim Cook, announced that tariffs would likely add around $900m to Apple’s costs over the June quarter alone.

One major announcement last week was news that the legendary investor Warren Buffett will be stepping down as CEO of Berkshire Hathaway. Buffett has been at the helm since 1965, when it was a pretty modest and underperforming textile company. He leaves after 60 years with the company, now a $1.2 trillion conglomerate and, as of Friday, with the shares at a record high. Incredibly, the shares have risen approximately 20% per annum over those 60 years, double the return of the S&P 500 Index. For anyone seeking to teach their kids about the power of compounding and staying invested, Berkshire Hathaway’s 2024 year-end annual report highlights that this represents a cumulative return of 5,502,284% versus 39,054% for the S&P 500 Index over that period. This is despite including share price declines of over 30% in 2008 and approximately 50% in 1974.

Most other equity markets also performed positively last week. The MSCI Europe ex-UK Index was up +3.4%, the MSCI Japan Index was up +2.5%, and the MSCI Emerging Markets Index was up +3.3%, all in GBP terms. The FTSE All-Share Index was up +2.3%, with mid and smaller companies generally the better performers.  Markets are predicting that the Bank of England will almost certainly cut interest rates this week. Inflationary risks in the UK seem to be receding with wage growth expected to slow, energy prices falling and concerns over declining global activity caused by ongoing tariff uncertainty providing the Central Bank with greater ability to cut.

Away from equities, global bonds were broadly flat over the week, although global high yield bonds delivered small gains. Broad commodity indices dropped back over the week as oil prices continued to decline over a combination of global growth concerns and fears of a global supply glut following a decision by OPEC+ oil producing nations to increase supply.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon. 

The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products. 

The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments. 

All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 6th May 2025.

© 2025 YOU Asset Management. All rights reserved.

by Ellen Ward

The World In A Week - The bounce back

Written by Cormac Nevin

Last week was a strong one for global equity and fixed income markets as investors continued to allocate to US tech stocks in the face of ongoing uncertainty regarding tariff policy and the second order implications of said policy. The MSCI All Country World Index of global equities was up +3.4% in GBP while the NASDAQ 100 Index of US tech stocks was up +6.4% in USD terms. However, the ongoing weakness in the US Dollar translated the weekly gains in the NASDAQ to a +5.8% return for GBP based investors. This continued the story of the year to date, which has seen a sustained selling in the US Dollar, particularly since the announcement of Trump’s tariff policies on the 2^nd April despite last week’s recovery in equity markets. In fixed income markets, we saw the riskiest areas of the market as measured by the Bloomberg Global High Yield Corporate Index rebound strongly, returning +1.2% in GBP hedged terms for the week.

A range of views have been circulating regarding the recovery in observed market sentiment. Some point to an easing in trade tension rhetoric (despite scant evidence of actual progress on substantial trade deals), strength in corporate earnings with decent (backward-looking) earnings posted by Alphabet/ Google and also continued buying from retail investors. We remain mindful that much of the data observed currently is rather stale and that the likely second-order implications of the trade disruption are only going to appear with a lag. Much of the global financial system is hard-wired to buy outsized volumes of US equities via unthinking “passive” investment strategies – and it may take some time for foreign authorities to unwind these flows with the aim of keeping capital at home instead.

Whatever the outcome for the US economy from the uncertain trade policy, we continue to focus on attractive investment opportunities across the globe which are not concentrated on any one geography. This approach has strongly shown its benefits throughout this year, and we feel it is reasonable to expect that to continue.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon. 

The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products. 

The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments. 

All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 28^th April 2025.

© 2025 YOU Asset Management. All rights reserved.

by Ellen Ward

The World In A Week - Diversification to the rescue

Written by Chris Ayton

Last week was a mixed one for equity markets with the MSCI All Country World Index down -1.0% in GBP terms. However, with the US being the dominant component of global equity indices, this result was heavily influenced by the -2.8% return of the S&P 500 index. The US equity market lagged once more as investors continued to flee the stock market and the US Dollar as nervousness around President Trump’s unpredictable economic policies led them to look elsewhere. Trump’s continued criticism of Federal Reserve Chairman, Jay Powell, suggesting he should be removed from his post for not cutting interest rates quickly enough, has also created concerns over the ongoing independence of the US central bank.

Conversely, the UK equity market was one of the strongest, returning +4.0% over the week as domestic corporate profit results were generally robust and the market’s lower allocation to the out-of-favour tech sector and greater prevalence of cheaper stocks held the market in good stead. Continental European indices were also robust with the MSCI Europe ex-UK Index up +2.4% over the week in GBP terms. As expected, the European Central Bank lowered interest rates by 0.25% for the third time this year, citing subdued inflation but warning of continued risks to European growth emanating from tariff-related tensions.

Japanese equities were also in the green, with the MSCI Japan index up +3.4% over the week in GBP terms. In recent weeks the market has been worried about the tariff related risks for large Japanese exporters, but some comfort was taken when, after a face-to-face meeting with President Trump and Treasury Secretary Scott Bessent, the Japanese Minister of Economy, Trade & Industry suggested to reporters that the US President had said getting a deal with Japan was a “top priority”.

Away from equities, other diversifying assets generally held up well and supported appropriately constructed, multi-asset portfolios. Bond markets enjoyed a positive week with the Bloomberg Global Aggregate Index up +0.7% in GBP hedged terms. High Yield bonds performed particularly well. Commodities were also collectively positive with gold’s perceived safe-haven status helping the gold price to hit repeated all-time highs.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon. 

The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products. 

The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments. 

All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 22^nd April 2025.

© 2025 YOU Asset Management. All rights reserved.

by Ellen Ward

The World In A Week - Blink and you may miss it

Written by Millan Chauhan

We saw the Trump administration issue several tariff announcements last week which included both the US and China implementing retaliatory tariffs, escalating the trade war between the world’s two largest economies.

President Trump implemented 145% tariffs on Chinese imports, which China responded to with 125% tariffs on all US imports. Universal tariffs of 10% were also announced for imports into the US, however, Trump later announced a 90-day pause on tariffs (except for China) which offers the opportunity for nations to negotiate better terms.

These constantly evolving headlines caused higher levels of volatility as the S&P 500 experienced the three largest intra-day price movements on record, all in the same week.

On Tuesday, the S&P 500 almost entered a bear market, which is defined as a decline in prices of more than 20% from their high. We also saw the third-highest daily return for both the S&P 500 and the technology-heavy index of the Nasdaq. In what was a remarkable week, the S&P 500 closed +4.8% higher and the Nasdaq +6.5% higher, both in GBP terms.

This included the largest daily return for the S&P 500 in history as the index climbed +9.5% last Wednesday. It is a reminder that even under the most stressed market conditions, the resilient investor can be rewarded and emphasises the importance of staying invested.

Last Friday evening, the Trump administration announced that there would be exemptions from tariffs for Chinese-imported phones, computers and other electronics. However, it later emerged that these exemptions would be temporary and could face a separate round of tariffs, contributing to the growing uncertainty.

Amid all the tariff discussions, the US Consumer Price Index (CPI) fell to its lowest level in four years, 2.4% in March from 2.8% in February; this figure came in below expectations. We also saw the big US banks open the quarterly earnings season, posting strong earnings but executives warned of tariff implications for economic growth. JP Morgan’s earnings exceeded estimates, but their CEO, Jamie Dimon warned of credit risks amid the current market volatility.

According to FactSet, the Q1 2025 earnings growth rate for the S&P 500 is expected to be 7.3% but this figure is subject to further revisions as companies issue guidance on their expected earnings for future quarters.

Tariff risks have reduced economic growth forecasts and increased the likelihood of the US entering a recession. This has resulted in further weakness in the US Dollar, which fell -1.5% last week against Sterling and has slid -4.3% on a year-to-date basis against Sterling. Treasuries also fell last week as yields on the 10-year US Treasury climbed to 4.5%.

Meanwhile, we saw broadly positive news for the UK as the economy grew 0.5% in February, driven by stronger services output. The UK economy grew 1.4% on a year-on-year basis, which exceeded expectations.

Whilst short-term volatility can be unsettling, our globally diversified approach to investing across asset classes, market caps, and investment styles continues to provide a strong foundation for navigating these turbulent times.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon. 

The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products. 

The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments. 

All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 14th April 2025.

© 2025 YOU Asset Management. All rights reserved.

by Ellen Ward

The World In A Week - The market falls, but the strategy stands

Written by Ashwin Gurung

Last week, US President Donald Trump unveiled a series of tariffs targeting countries around the world which would collectively take tariff rates back to levels not seen since the 1930’s. He believes these measures will encourage American consumers to favour domestically produced goods, re-shore manufacturing jobs and raise revenue to fund his proposed tax cuts, thereby supporting local industries and growth. A baseline tariff of 10% will be applied to all imports into the US, excluding Canada and Mexico. Many other nations, however, will face significantly higher duties under a "reciprocal" tariff system, where the US claims to be matching the tariffs imposed by its trading partners on American products. In reality, these “reciprocal” rates were determined via simply calculating the trade deficit with each country and assuming the US is somehow being disadvantaged by that.

China responded by announcing retaliatory tariffs of 34% on US imports, while several other countries initiated plans for negotiations with the US. Although the full economic impact of these measures remains uncertain, they have undeniably heightened fears of global economic growth slowdown and higher inflation. This has further mounted pressure on the Federal Reserve (Fed) to lower US interest rates to support the economy caused by worsening trade tensions. However, on Friday, Fed Chair Jerome Powell acknowledged and reiterated that the effects of these tariffs remain uncertain and that the Fed will wait for more clarity before adjusting interest rates. Similarly, the Bank of Japan and the European Central Bank are also seeking clarity and are expected to delay any changes to their monetary policies.

Uncertainty quickly spread through financial markets, leading to a sharp fall in global equities. Last week alone, the MSCI All Country World Index fell -7.8% in GBP terms, with the US market being one of the hardest hit. For UK investors, the losses were made worse by a falling US dollar, something we don’t often see during market stress, as the dollar usually strengthens. The S&P 500 declined -9.0%, while the more technology-focused Nasdaq 100 dropped even further, falling -9.7%, both in GBP terms. Similarly, small and mid-cap companies, as measured by the Russell 2000 Index, which are more economically sensitive, fell -9.6% in GBP terms.

The impact was felt across the globe, with the FTSE All-Share Index and MSCI Europe ex-UK Index dropping by -7.0% and -6.9%, respectively, while MSCI Japan Index and MSCI China Index fell -7.3% and -3.0%, respectively, all in GBP terms. The unexpected 24% reciprocal tariff on Japan particularly affected the country's export-driven index. However, the Japanese yen, often seen as a safe-haven currency, strengthened, helping to limit losses for UK investors.

As painful as it was for global equity markets, it was a positive week for our diversifying asset classes, particularly, Absolute Return, high-quality global Fixed Income and certain Real Asset strategies, which undoubtedly reinforced the importance of maintaining diversification across asset classes during these turbulent times.

The Bloomberg Global Aggregate Index of global bonds returned +1.1% in GBP-hedged terms, while our exposure to US longer-dated bonds, which are more sensitive to interest rates, returned +4.5%, as expectations for interest rate cuts in 2025 increased. Similarly, infrastructure-related assets, such as utilities, which are less susceptible to business cycles, remained resilient. Adding to the diversification was our selection of absolute return managers, particularly the Fulcrum Thematic Equity Market Neutral Fund, which returned +3.3% over the week in GBP terms and continues to deliver positive returns independent of market direction.

While short-term volatility can be unsettling, our globally diversified approach across asset classes, market caps, and investment styles continues to provide a strong foundation for navigating these turbulent times. By maintaining this exposure, we are better positioned to limit downside risks and capture opportunities as they arise.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon. 

The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products. 

The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments. 

All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 7th April 2025.

© 2025 YOU Asset Management. All rights reserved.

by Ellen Ward

The World In A Week - Tariff Man redraws global capital flows

Written by Cormac Nevin

Markets endured a broad-based sell-off last week, with the MSCI All Country World Index of global equities returning -1.7% in GBP terms. The sell-off was concentrated in the US market in general, and large-cap US technology names in particular. The UK market was a source of stability in equities, rallying +0.2%, while global investment grade bonds also returned a positive +0.1% in GBP hedged terms. What has been unique about the challenges faced by the US equity market this year has been that it has been accompanied by a concurrent weakening in the US Dollar, meaning losses are exacerbated for GBP investors. This is relatively unusual in recent years, as we often see the US Dollar rallying in times of stress.

One interesting aspect of markets this year has been that the second coming of a President initially viewed as good for US stocks (and capital markets more broadly) appears to be driving international investors away from these assets as he re-aligns global relationships at a far deeper and faster pace than his first presidency. Investment in US assets by default has, over recent decades, become almost hard-wired into everything from global capital markets to personal investment plans. Today this is overwhelmingly done via the unthinking and very basic algorithm that is “passive” investment. If we look at one of the most popular LifeStrategy ranges in the UK, running £43bn in assets, they unthinkingly default 52% of every Pound they receive for equity allocation to the US market (in their range for European investors it is as high as 64%). This is also done blindly at market cap weights, meaning exposures are now very concentrated in large-cap tech stocks -an interesting outcome for products that are marketed as diversified investment solutions!

Governments in the UK, Europe and across the globe are increasingly keen to see those mechanical investment flows stay within their borders and indeed employed to fund re-armament or other infrastructure projects at home. One of the most consequential (if unintended) tariffs Trump enacts might be one on the US stock market. While the US equity market has been a fantastic source of returns for investors in recent decades, we think that a broad-based investment allocation framework remains very well suited to realising investment goals in the current climate.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon.

The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.

The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments. 

All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 31^st March 2025.

© 2025 YOU Asset Management. All rights reserved.

by Ellen Ward

The World In A Week - No surprises

Written by Dominic Williams

Overall, markets enjoyed a positive week, with the MSCI World Index gaining +0.8% in GBP terms, boosted by value stocks, which outperformed their growth counterparts over the week. The main focus was on interest rate decisions from three major central banks, all of which delivered outcomes in line with market expectations.

The week began with the Bank of Japan, which voted to maintain interest rates at 0.5%, a 17-year high, meeting consensus forecasts. The central bank has been gradually raising rates over the past year in response to rising inflation, while also working to normalise monetary policy after decades of deflationary pressure. The decision to hold rates was largely driven by ongoing uncertainty around the US administration’s evolving trade policies, particularly concerning tariffs. As Japan is a heavily export-oriented economy, any tariff-related developments could have significant implications. Market reaction to the interest rate decision was muted. However, Japanese equities performed strongly, with the MSCI Japan Index rising +3.2%, supported by gains in value stocks, the MSCI Japan Value Index rose +4.2%, both in GBP terms.

Later that day, the US Federal Reserve (Fed) also opted to leave interest rates unchanged at 4.5%, again aligning with market expectations. However, attention quickly shifted to Fed Chair Jerome Powell’s comments and the updated economic projections. The Fed now expects US GDP growth in 2025 to be 1.7%, down from the previous forecast of 2.1%. Core inflation is projected to remain elevated at 2.8%, above the Fed’s 2% target. Much of this revision is attributed to the anticipated impact of new tariffs, which are expected to push inflation higher while dampening growth. However, as we’ve noted previously, the real-world effects of these tariffs remain highly uncertain.

Despite these cautious projections, US markets posted gains, with the S&P 500 rising +0.7% over the week. Notably, most of the gains were concentrated in value and smaller capitalisation stocks. The Russell 1000 Value Index increased by +1.2% while the Russell 2000 (small-cap index) rose by +0.8%, both in GBP terms.

On Thursday, the Bank of England also held its base rate steady at 4.5%, as widely expected. The Bank indicated it remains open to potential rate cuts later in the year, as it attempts to strike a delicate balance between curbing elevated inflation and supporting an economy showing signs of weakening. In line with the Fed, the Bank of England revised down its growth forecast for 2025 from 1.5% to 0.75%. Markets remained relatively neutral, with the FTSE All Share rising by a modest +0.1%. However, UK value stocks contributed most positively, with the MSCI UK Value Index rising +1.0%.

In continental Europe, Germany’s newly appointed Chancellor, Friedrich Merz, unveiled a significant €1 trillion investment package in defence and infrastructure. This ambitious programme will be funded by a relaxation of Germany’s traditionally strict fiscal rules, marking a notable policy shift. The initiative is expected to boost the country’s defence readiness, stimulate economic activity, and support job creation in Europe’s largest economy, which has suffered from sluggish or negative growth in recent years. However, the overall European market was little changed by this announcement, the MSCI Europe ex-UK Index rose +0.2% over the week in GBP terms.

China bucked the trend seen across most markets, with the MSCI China Index posting negative returns of -1.6% in GBP terms. This marks a reversal from the performance year to date, where China had been one of the stronger performers. Within Emerging Markets, India saw a turnaround in fortunes, with the MSCI India Index gaining +6.6%, in GBP terms following negative performance year to date.

These developments highlight the importance of maintaining a well-diversified portfolio across regions and investment styles. As different areas come in and out of favour, diversification remains key to capturing opportunities and mitigating risks in a changing macroeconomic environment.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon. 

The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products. 

The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments. 

All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 24th March 2025.

© 2025 YOU Asset Management. All rights reserved.

by Ellen Ward