Bond market stability supported broader equity participation while commodities, particularly gold and copper, continued to perform strongly.
An economic and political state of uncertainty is expected to peak on 20 January with the inauguration of the new US president. Many actions have been promised by President Trump, and it will take time for clarity to emerge as policies are introduced, assessed, and responded to.
Bond markets were relatively stable last week after significant declines since the start of the year. This stability helped lift share prices during the week, with industrials and materials sectors outperforming the technology and consumer sectors that have been dominant in recent months. As a result, the iShares S&P 500 Equal Weight ETF, which was added to the funds of funds portfolios in Q4 2024, is currently the strongest performing equity fund in the T. Bailey portfolios YTD, having gained over 5% in Sterling terms. We maintain the view that earnings growth, and as a consequence equity market performance, should broaden from here.
Commodities have been the strongest performing area, with gold (accessed through the iShares Physical Gold ETC) held in the multi-asset funds and copper (WisdomTree Copper ETF) held in all three funds of funds performing well. Whilst recent policy announcements within China to stimulate economic growth have been supportive for the price of copper, we are mindful to keep watch of its position size in the T. Bailey portfolios, particularly given the risk of US tariffs.
