Market & Portfolio Update - March 2022
Global share markets gained 3% following strong economic data releases, investors understanding the economic implications of the Russian invasion better, and more clarity around the Federal Reserve’s hiking path over the remainder of 2022. The New Zealand share market gained as well, however, the Australian market was the strongest performer returning over 6% for the month. The Australian market has a higher allocation to commodity producers such as iron ore miners and natural gas, which have performed well as global commodity prices have risen since the war began.
The impacts of the war continue to keep commodity prices elevated, and inflation is rising globally. Here in New Zealand, the Reserve Bank’s job is to maintain price stability and inflation at 2% over the long term. With inflation running considerably higher than that at the moment, we are seeing an increased chance of the RBNZ raising interest rates by 0.5% at their next meeting.
Meanwhile, the US Federal Reserve raised its policy rate by 0.25%, with eight further hikes (2.2% in total) expected by the markets for the remainder of 2022. The Fed also discussed plans to reduce its $9 Trillion balance sheet over the coming months.
The magic of the managed fund
Let’s talk about shares for a minute. No matter how you invest, there are really just two ways to make money from owning shares:
1. You receive a slice of the profits (called dividends), or
2. You sell your shares to someone else for more than you paid (that’s capital gain).
That’s it. Anything else is simply a different way of packaging those two outcomes.
What is Life Insurance?
Life insurance is one of those things that many people know they should probably have but they’re not quite sure what it does, how it works, or whether it’s actually relevant to them. This article breaks it down in clear, everyday terms to help you understand the basics before you decide if it’s something worth exploring further.