Latest investment update
Here you’ll find your update on NatWest Invest and other investment news, to help keep your finger on the pulse.
Quarter 2 2021: Open for business
Investment highlights from 1 April to 30 June 2021
Published: 19 July 2021
At a Glance
- Stock markets ended the quarter on a positive note as vaccinations continued and the world opened up
- Bonds also delivered positive returns
- Inflation shot up but central banks said it was temporary
Three developments this quarter relevant to NatWest Invest
1) Europe – better late than never
European stocks performed well after a slow start to the year. Vaccinations and economic support took a while to get going on the continent, but have since picked up.
Our view: We believe improving economic conditions worldwide will continue to benefit stock markets in Europe. We increased the amount we invest in the region earlier this year.
2) Don’t worry, the price is still right
We saw relatively large rises in inflation in the UK and US over the quarter. This worried markets as higher prices can lead to higher interest rates, which can dampen company profits.
Our view: Central banks on both sides of the Atlantic calmed market nerves by calling the jumps in inflation temporary and keeping interest rates low. We don’t expect any imminent changes as policymakers don’t want to derail the strong economic recovery.
3) Best of British
Stock markets in the UK performed well for most of the quarter thanks to a speedy vaccination program and large number of companies that do well in a growing economy, such as energy firms.
Our view: The Bank of England said it expects the country’s economy to recover from the coronavirus pandemic faster than expected. This, along with a fall in unemployment and increase in consumer spending, points to solid progress since the pandemic.
“Stock markets have risen all year as economies around the world increasingly open up again. Successful vaccine roll-outs, particularly in the UK, US and Europe, are proving to be the perfect remedy for investors right now.”
Monique Wong, Executive Director, Asset Management at Coutts, which runs the NatWest Invest funds.
The Big Number
Size of the infrastructure bill agreed by the US Senate which includes funding for roads, bridges, the power grid and public transport (source: The White House, June 2021)
Managing Your Money
Changes the experts at Coutts made this quarter
Sold emerging market shares, bought European stocks
We sold some of our emerging market investments and bought more European stocks instead. Emerging market shares rose in late 2020 and early 2021, but have become more subdued. This is partly due to slowing economic growth in China and a strong dollar, which can be bad for emerging market returns.
Europe, meanwhile, has performed well after its vaccination program gathered momentum and the European Commission agreed an economic support package.
Increased our investment in healthcare
We gained more exposure to the healthcare sector in May. Healthcare was a star performer for investors over these three months. The relevant companies tend to deliver decent returns as the economy moves from initial recovery to steady growth.
Positive long-term trends around an ageing population and increased spending also make the sector very attractive.
When investing, past performance should not be taken as a guide to future performance. The value of investments, and the income from them, can go down as well as up, and you may not recover the amount of your original investment.
The degree to which these developments will affect your investment’s performance depends on which NatWest Invest fund you hold.