August volatility

August was one of the more volatile months we have seen in the last 5 years.  Global equity markets (measured in local currency terms, so with no impact form currency changes) were down around 12% intra-month and finished the month down 6.6%, Year to date down about 1%, and over the last 12 months up about 0.5%. 

Our equity fund performances weren't completely immune, but overall they have not experienced the same damage as purely passive global equity exposures:

Markets do look like they are entering a more volatile period with lower expected returns, however we believe markets are still in pretty good shape.  Valuations are good - particularly in Europe with a forward P/E of around 13.7  Unless earnings expectations fall off a cliff in both the US and Europe, markets shouldn't continue to sell off, but if they do so, without significant downward earnings revisions then they just become cheaper.

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