M O N T H LY U P D A T E S A N D A N A L Y S I S F R O M T H E V M W E A L T H T E A M
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EXPERIENCED OR NEW, THERE’S A UNIT TRUST FOR YOU
Global Investment Trends for 2021 » Introducing the VM WealthWise Podcast! » Market Update & Economic Overview - June 2021
Global Investment Trends for 2021
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Experienced or New, There’s a unit trust for you
Market Update and Economic Overview
Jodie-Ann Bennett MEET THE TEAM
Premium Wealth Officer VM Wealth Management
Jodie-Ann Bennett is a successful woman in the financial arena, and with over 19 years of experience, brings a wealth of knowledge to the team. She has managed to remain successful as an Advisor by creating and fostering meaningful relationships. She executes her functions with a high level of professionalism but manages to remain humble despite her success, as she maintains and firmly believes that there is always room for growth in any aspect of one’s life. She is a mother of one and her hobbies include reading, doing puzzles, swimming and socializing with others.
Global Investment Trends
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So far, 2021 has had its ups and downs for investors as recovery from the pandemic continues. There are no rules for investing during this kind of global event because it’s a once-in-a-lifetime event, that will end at some point. The distribution of COVID-19 vaccines is being followed closely by investors around the world hoping the pandemic will soon be behind us.
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However, while investing trends have expectedly been influenced by the pandemic, other factors like technological advances, market disruptions and shifts in investors’ perspectives have also been fuelling behaviours.
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Millennials, Gen Z and women are Investing More Now that technology allows us to access the stock market from a smartphone with smaller amounts of money, a new generation of investors has been getting into online trading. People also have much faster and easier access to information.
According to the Australian Securities Exchange, close to 25% of all Australian investors started investing in the past two years, with a significant rise in investors aged 25 or younger. The same study found that 45% of the country’s new investors are women. While technology is a major factor, commissions and trading fees have been getting smaller, allowing more and more people to enter international markets.
Betting on the Rebound According to Fannie Mae, a US government-backed mortgage firm, one side effect of the pandemic was an increase in personal savings last year. At the start of this year, Americans’ savings were still above pre-pandemic levels. Trends like this have experts assuming that the more businesses reopen, the more consumers will get back to spending their disposable cash on activities like travel, shopping and dining out. The increased economic activity should do wonders for hard-hit tourist cities worldwide, which would boost GDPs.
Cryptocurrency Cryptocurrency is a new way to transfer value between people. Thanks to the underlying blockchain technology, crypto requires no third-party intermediary, unlike traditional methods of payment. Now just over a decade old, the technology is still new and highly volatile. As a result, cryptocurrencies are widely considered a high-risk asset class. However, a growing number of large companies and high-profile investors are investing in crypto. And while investors have begun to include some types of cryptocurrency
in their asset portfolios, it’s worth noting that, as with any high-risk investment, continued returns are not guaranteed. Some market observers say crypto could remain popular with younger investors like millennials for some time. However, reports of greater regulation and criticism about the environmental costs seem to have dampened the speculative fever for now.
ESG Investing Traditionally financial advisors often tell clients to take their emotions out of investing. However, in recent years, a new breed of ethically-minded investors have become increasingly interested in investing based on their values. This kind of investing called ESG, for Environmental, Social, and Governance, targets companies with specific values embedded within their business model. These values can include environmental impact, social outcomes, transparency in governance, supply chain processes, as well as commitment to diversity and other ethical concerns. One study by Bloomberg estimated ESG investments worldwide will reach $38 trillion by the end of 2021, growing to $53 trillion by 2025 -- one third of all assets under management. For ESG investors, investing is about more than just returns, they want to see businesses taking responsibility for the world we’re all creating for the future. In many cases, ESG investors would rather accept slightly lower returns than invest in a company, for example, that pollutes the environment. Big tech stocks like Apple, Microsoft and Adobe rank highly in sustainable and ethical investing. Investors worldwide would do well to remember there will always be short-term events that have an effect on your investments and the stock market, but overreacting can impede your progress toward your long-term goals. It has been shown that, when it comes to global crises, investors should stay focused on their longterm investment strategy and stick to their financial plan. However or wherever you choose to invest, one approach will always be trending: Do your research first and if you have questions, speak to a financial advisor.
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Experienced or New,
THERE’S A UNIT TRUST
FOR YOU
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s pooled investments go, unit trust funds are an attractive option for beginners and for seasoned investors alike, but for different reasons. If you’re new to investing, the ease of entry and the opportunity to have your investment professionally managed are just two reasons a unit trust might be right for you.
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As pooled investments go, unit trust funds are attractive options for beginners and for seasoned investors alike, but for different reasons. If you’re new to investing, the ease of entry and the opportunity to have your investment professionally managed are just two reasons a unit trust might be right for you. If you’re a seasoned investor, exposure to an array of asset classes and the flexibility of a unit trust would make a solid addition to most portfolios. If you’re still wondering if this is the way to go, here are some of the benefits of investing in a unit trust fund: VARIETY ─ Each unit trust portfolio is made up of assets of a particular class, like equities, bonds or real estate. With these options, units can be bought based on your unique risk profile and the potential for returns. DIVERSIFICATION ─ Unit trust funds are designed with built-in diversification. Equity funds, for example, are made up of a large number of investments in a range of stocks. VM Wealth’s Classic Equity Growth Portfolio is one example, with a portfolio consisting of 20 different companies listed on the Jamaica Stock Exchange. The result for unit trust holders is a diversified investment with a reasonable amount of protection from the shortterm price fluctuations of any single stock. AFFORDABILITY ─ The barrier to entry for unit trust funds tends to be relatively low. A popular strategy involves buying a block of units to start, then buying additional units on a monthly basis to enhance your portfolio over time. This option can be automated using a standing order, allowing you to increase your earnings potential without the hassle of placing orders on a regular basis.
PROFESSIONAL FUND MANAGEMENT ─ All unit trust portfolios are professionally managed, giving your portfolio the benefit of expert analysis and years of experience. The fund managers design the portfolios, then manage them on an ongoing basis, making adjustments and rebalancing based on changes in the markets. Their aim is to optimize returns, while mitigating risk, so investors come out on top. EXPOSURE ─ By investing in a unit trust portfolio, investors gain access to instruments and markets that might otherwise be closed to them. With a pooled fund, the capital input from all the investors is combined and invested as a whole. This allows investors to benefit from returns on assets they may not be able to afford individually. LIQUIDITY ─ Converting your unit trust investment to cash is as easy as selling your units at the current rate. These rates are published in the press on a weekly basis and on our website daily. Before buying units, be sure to find out about any fees that will apply. For investors just stepping into the world of investing or looking for a way to diversify your portfolio with new asset classes, a unit trust fund is an easy, affordable option. If you’re an experienced investor, you’ll appreciate the ability to choose a mix that works best for your goals and risk appetite. For any unit trust investor, the chance to have your investments professionally managed and actively balanced based on careful analysis by a dedicated team of experts is invaluable. Whatever your risk profile or level of experience, if you have a goal, chances are there’s a unit trust for that.
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Click here to see our Stock Picks as at July 20, 2021
Introducing the VM WealthWise Podcast! In this series, we get real about MONEY! Whether you want to build wealth, increase your wealth, manage your wealth, or simply want to adjust the way you look at wealth — we got you! Tune in every Wednesday at 6:00pm as our host Daniele, discuss all things wealth with experts and industry titans to ultimately make you wiser about your wealth. We are kicking things off with Unit Trusts 101. Click here to listen to the first episode.
Wealth Knows
Averaging Up Averaging up refers to the process of buying additional shares of a stock you already own, but at a higher price. This raises the average price that the investor pays for all the shares. 8
Market Update and Economic Overiew June 2021
Fixed Income In June, market activity was heavily influenced by thedebate on US inflation, the current economic recovery and how these will affect future Fed policy. On the inflation front, core inflation increased by 0.6% month-over-month in May, versus the 0.5% expected. Read the full report
Money Market The Bank of Jamaica’s overnight rate of 0.50%, remained unchanged at the June 30th rate consideration. The next review is scheduled for August 19th, but it is not anticipated that any change will be announced. Read the full report
Equities The local stock market was active during the month of June, with 59 stocks trading, of which 30 advanced, 26 declined and 3 traded firm. Wigton Windfarm (WIG) was the volume leader, trading 29.6% of the monthly volume, followed by Sagicor Select Funds (SELECTF) and Transjamaican Highway (TJH). Read the full report
Foreign Exchange During the month, the JMD, according to the Bank of Jamaica’s (BOJ) Weighted Average Selling Rate (WASR) gained $0.84 (0.56%) to close at $148.5164. The BOJ supplied the market with USD 80 million via three flash auctions on June 10th, 18th and the 19th, with resale restricted to end-users. Read the full report
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