Market update: April 2022

April was a difficult month for the markets. The S&P 500 fell 8.8%, its worst month since March 2020. The rising cost of consumer goods, the war in Ukraine and the risk of higher interest rates were all factors affecting the market.

But, because Vive has diversified investments in different countries and sectors, we also benefited from positive movements. Most major technology companies posted good results in the first quarter. In addition, in Asia, COVID cases continued to fall. This is good news for global trade and the vacation season. The Nasdaq 100 companies are now back to pre-pandemic levels.

Best fund performance in April 2022: Northern Trust Global High Yield ESG Bond Index (+0.7%)

Global High Yield outperformed due to the depreciation of the Euro, while developed market equities declined.

The developed country fund had a difficult month. Again, Ukraine's war, rising interest rates and the risk of a minor recession played a major role. Companies like Netflix and Amazon underperformed due to poor results, but good results from companies like Apple and Microsoft partially offset these losses. The Euro fell ~5% against USD. As a result, the Northern Trust World Custom ESG Equity Index Fund closed the month down -3.3%.

The emerging markets fund continued to struggle due to increasing COVID lockdowns in Chinese cities. Fortunately, strong results from the likes of Samsung and TSMC partially offset these losses. Rising demand for semiconductor chips also provided a positive impact on the share price.

Interest rates on 10-year government bonds rose between 0.4% and 0.6% in most developed markets, such as the US and Germany. In two months, interest rates on long-term bonds rose more than 1%. A big change thanks to market volatility. This increase continues to negatively impact bond funds. The 10-year interest rate is already at 3% in the U.S., but may be capped which will likely cause the funds to recover.

European money market yields remain low. This is because the ECB does not want to raise short-term interest rates (yet). Unlike Federal Reserve, which also plays into the fact that the value of the Euro has dropped against the USD.

‍What does May have in store for us?

- Any move toward ending the war in Ukraine is essential to reduce violent market movements.

- The outcome of the Federal Reserve meeting in early May will shed light on the further course of interest rates.

- Economic data will be closely watched by the market to detect any signs of a recession, but potential positives will also be strongly endorsed.

‍What does this mean for my plans?

Don't let a down month disrupt your plans. A well-diversified portfolio is the key to long-term success. A broad portfolio as Vive puts it together will most likely show an upward trend in the long run, even if there are lesser periods in between. Stay calm and keep investing.