The nascent bull market continued in Q3 as the MSCI ACWI hit new highs before encountering September turbulence—normal volatility, in our view, even this early in a bull market. Overall, global equities rose 8.1% in the quarter. Nine months in, global equities are up 1.4% on the year.
Global equities followed one of history’s worst quarters with one of its best in Q2, soaring 19.2%. Year-to-date, global equities are down -6.3%. Similarly, emerging market equities rose 18.1% in Q2, as growing progress—and clarity—on major emerging and developed countries’ COVID-19 lockdown relaxations continued.
Global equities fell sharply in Q1 dropping -21.4%, going from all-time highs in January to a bear market with record-breaking speed. The sudden fall, combined with society’s understandable worries about COVID-19’s impact on their health, their loved ones and their community, has spread fear to every corner of the world—and the marketplace.
Global equities capped the strongest year since 2009 with Q4’s 9% gain, lifting full-year returns to 26.6%. We expect the bull market to continue in 2020, although returns are unlikely to match 2019’s magnitude.
After rising 16.2% in 2019’s torrid first half, global equities took a breather in Q3—finishing flat for the quarter. As we anticipated, equities had more short-term volatility than earlier in the year, which slowed gains.
Global equities added another 3.6% in Q2, capping the strongest first-half since the late 1980s. As we anticipated, Q2 brought more volatility than Q1, but robust returns in June carried equities to all-time highs, with the MSCI All Country World Index returning 16.2% year to date.
Through March 31, global equities were up 16.9% since December 25’s low and 12.2% in Q1. The MSCI All Country World Index has enjoyed the V-shaped recovery we expected following the sharp sell-off in December. Overall, this should be only the beginning of a great year for global markets.
2018 was a difficult year—downside volatility returned and the year concluded with the second worst December on record. Global equities declined -9.4% last year and returns didn’t meet our optimistic expectations. Yet, looking forward (as markets do), evidence we will detail overwhelmingly argues against being bearish now.
Investor optimism typically increases as a bull market matures. Recent correction angst notwithstanding, US sentiment has improved but is not yet euphoric.
The MSCI All Country World Index finished the second quarter up slightly amid evolving fears. Concerns over rising yields, tariffs, slower economic growth and politics alternated headlines as this correction’s alleged cause.
Fisher Investments Australia offers a variety of Global, Non-US, and US Equity strategies for institutional investors. FIA delegates portfolio management to its parent company, Fisher Investments, a money management firm in the US founded in 1979 by investment guru Ken Fisher. Today, Fisher Investments and its affiliates oversee more than $135 billion* in assets for over 75,000 private clients and 175 institutional clients globally.* Founder Ken Fisher’s “Portfolio Strategy” column for Forbes ran from 1984 through 2016, making him the longest continually running columnist in the magazine’s 90+ year history. He has also authored several New York Times bestsellers on finance and investing. (*As of 9/30/20)
For your reference, Fisher Investments Australasia is an investment manager located in Sydney. The parent company, Fisher Investments, is based in the United States, and manages assets for large institutional clients around the world.