Market Insight Weekly Update: Momentum Shift

As the market picks up, our investment teams shares why it is important for investors to get a trusted financial adviser and what are the considerations in selecting them
14 September 2022

As the market picks up, our investment teams shares why it is important for investors to get a trusted financial adviser and what are the considerations in selecting them.

(5 September 2022 – 9 September 2022)

The major stock indexes closed out a holiday-shortened week with solid gains, snapping a three-week losing streak that sent the S&P 500 down more than 8%. For the latest week, S&P 500 rose nearly 4% while the MSCI World Index rose 3%, MoneyOwl’s 100% equity portfolio rose 2.84%.

The U.S. 10-year Treasury yield is experiencing a relentless rise with a further interest rate hike expected – the yield of the 10-year U.S. Treasury bond climbed for the sixth week in a row, reaching around 3.32% on Friday.

There was no major catalyst for the rise in stocks last week. Investors appear to have more confidence that the market had reached at least a temporary bottom after surrendering about half of its summer rally. Some moderating inflation fears may have also been at work. The market started turning up midweek on Wednesday where some trading desks of investment banks reported light trading volume, which may be the reason why stocks rose easily despite few headlines.

An Advisor for Life

A recent article in Wall Street Journal found that younger affluent investors are eschewing traditional financial advice in favour of a self-directed approach. Many are opting for digital platforms that offer convenient access to trading and an expanding range of alternative investments, from cryptocurrency to business startups. Making sense of the vast landscape of options is crucial to pursuing a good investment outcome.

In view of expanding product choices and rising complexity today, MoneyOwl believes that qualified, trusted financial guidance will be more valuable than ever before. Product innovations and financial technology can offer more targeted choices for investors and tools for delivering financial advice. But industry competition can also lead to the development of fashionable products that may not reflect sound financial science or stand the test of practical implementation in dynamic, unpredictable markets. This means that advisors will continue to play a vital role in helping clients navigate complex choices and thoughtfully match investment strategies with your financial goals and values.

Finding an Advisor you can trust

Here are three questions you can ask in your search for a suitable and qualified advisor:

  1. Is your adviser competent?

Just as how you should consult a doctor to prescribe the right medicine to you and not a pharmaceutical salesperson, you should also find someone competent and qualified to plan for your financial future. Credentials which are highly sought after in financial planning are those under the Certified Financial Planner® programme, such as “Associate Wealth Planner (AWPCM)” and CFP® itself.

It takes only a few licensing exams to be legally allowed to dispense financial advice, but a lot more competence and mastery of the subject matter to achieve these accreditations. If you are looking for a qualified adviser, a good way to start is to select from this pool.

  1. Does your adviser’s compensation align with your interests?

Advisers who are fully salaried, as opposed to a commission-based compensation structure, allow them to provide conflict-free advice and unbiased recommendations. This is not to say that commission-based advisers are biased, but by taking commissions out of the picture, it removes potential conflict and ensures that the adviser’s interests are fully aligned with yours.

  1. Will your adviser help you reach your goals?

While a commission-driven salesperson focuses on products, a fully-salaried adviser will help come up with a holistic and unbiased plan to help you reach your goals.

Instead of being sales-driven for specific products, you will be better served by an advisor who takes you through a consultative process to better understand your goals and concerns and offers customised solutions to meet your unique situation.

As a financial adviser and fund management company licensed by the MAS, MoneyOwl holds ourselves to the highest of standards to put your interests first, and all our advisors are certified or undergoing training for specific credentials. Our leaders have a wealth of experience in comprehensive financial planning and fund management, so you can be assured of receiving the most competent advice. If you would like us to review your financial situation with you today, feel free to reach us at enquiries@moneyowl.com.sg.

UK Prime Minister

Liz Truss will become Britain’s third woman to hold the Prime Minister’s post when she’s formally asked by Queen Elizabeth II to form a government. She’s busy finalising plans for a £40-billion energy package for businesses, according to documents seen by Bloomberg. The incoming Prime Minister has also drafted plans to fix annual electricity and gas bills for a typical UK household at or below the current level of £1,971.

Dollar’s Strength

The dollar continues its ascent, leading to weaker currencies around the world. Normally, emerging-market currencies bear the brunt of dollar strength, but the effect has been more pronounced this year for developed-market currencies such as the yen and the pound. Aggressive tightening from the Federal Reserve is pushing rival currencies lower, especially for countries that are emerging from very low-rate regimes, many of which are in the developed world. Gold, too, is in the firing line, as the Dollar’s dominance pushes the precious metal towards the “danger zone” of $1,700 per ounce.

Mourning the Queen of England

The death of Queen Elizabeth II at the age of 96 prompted an outpouring of condolences from around the world. Ascending the throne in 1952, Elizabeth’s reign took Britain from the age of steam to the era of the smartphone and encompassed the largely peaceful breakup of an empire that once spanned the globe. Her passing marked the start of a tumultuous 10 days for the UK that will see the queen buried and a new king proclaimed as the nation mourns its longest-reigning monarch. Charles, the eldest of Elizabeth’s four children, will be formally proclaimed king in a ceremony dating back hundreds of years. At 73, he is the oldest person to accede to the throne in British history.

Europe Energy Crisis

The European Union is throwing together a series of radical plans to tame runaway energy prices and keep the lights on across the continent during winter— but governments across the region are going to need to find common ground quickly. The bloc’s energy ministers gathered in Brussels on Friday to take the first steps on ways to prevent Russian President Vladimir Putin’s cutoff of gas supplies from unleashing rationing, blackouts or even social unrest. As inflation soars, European Central Bank officials hiked interest rates by a historic 75 bps on Thursday and reiterated their commitment to delivering another jumbo interest rate increase at their October meeting if needed. It is a double whammy for the European economy with a possible recession threat in winter and slowing growth expected from further interest rate hikes.

Read more Market Insights here.

Disclaimer: While every reasonable care is taken to ensure the accuracy of the information provided, no responsibility can be accepted for any loss or inconvenience caused by any error or omission. The information and opinions expressed herein are made in good faith and are based on sources believed to be reliable but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. Expressions of opinions or estimates should neither be relied upon nor used in any way as an indication of the future performance of any financial products, as prices of assets and currencies may go down as well as up and past performance should not be taken as an indication of future performance. The author and publisher shall have no liability for any loss or expense whatsoever relating to investment decisions made by the reader.

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