Most post-match analysis in football now seems to focus upon tedious whingeing about the television replay system so some of the classic clichés are being sadly neglected but one of them applies to financial markets in 2020, because it has been a year of two halves for investors,” says Russ Mould, AJ Bell investment director.
“This can be seen in the performance data from global asset classes, the major stock markets, worldwide sectors and specific stocks. The key now for investors is to work out whether the shifts in trend in the second half – some subtle, some not – continue to shape portfolio performance and therefore influence asset, country, sector and fund or stock selection in 2021 and beyond.
“Hard to believe as it may be given the pandemic, market chaos in March and subsequent recessions across many countries, equities were the best place to be in 2020. As benchmarked by the MSCI All World index, global stocks beat corporate bonds, Government bonds and high-yield (or junk) bonds, with commodities dead last.
“Equities benefitted from Government fiscal and central bank monetary policy support schemes and hopes that vaccines would prompt a strong economic recovery in 2021 and bonds did well as a haven in the first half, when commodities, especially oil, were crushed owing to the recession.
“America was the best performer for much of 2020 but both Japan and Asia-Pacific slipped past it late on in the year.
“The UK was a turgid performer, weighed down by its sector mix and heavy exposure to banks and oils and limited exposure to technology, as well as Brexit and perceptions (fair or unfair) that the pandemic has not been handled that well.