Total Wipeout - US equity market gives up year to date gains as tech suffers
If you’re covering the US equity market and the current sell-off, please see the following commentary from Anthony Gillham, head of investments at Quilter Investors, the multi-asset investment manager:
“Peak-to-trough, Apple has now fallen from over $230 per share to around $180 in just a month and a half. We are talking about one of the world’s most valuable companies and most bought stocks in history so that is hugely significant. It provides a stark reminder of the importance of taking measured risks and the dangers investors face if they’re over-exposed to a growth stock when the momentum fades.
“This year we have seen growth stocks and tech companies in particular rally as investors bet that their earnings will grow exponentially in the coming years. Those share prices are vulnerable to a rapid cool-off in sentiment if the market comes to doubt the efficacy of those expectations. That is exactly what we’re seeing right now with Apple, as profit warnings from some of its suppliers suggest that handset sales may not grow as fast as anticipated.
“A combination of factors are fuelling concerns that current valuations may be over-zealous. In Apple’s case this includes the decision to discontinue reporting handset sales and the aforementioned profit warnings from chipmakers, but also wider economic factors including possible cooling in the US economy.
“Because the big tech firms now make up such a substantial share of total market cap, holders of the index are being punished proportionately as the likes of Apple suffer a pullback. Diversified investors with underweight positions may have lagged behind at times this year as tech stocks raced ahead, but those investors with a concentrated exposure to the tech rally are now seeing the tables turn.”
Notes to editors
Quilter Investors is part of Quilter plc. It provides multi-asset investment solutions designed for advised clients in the UK and internationally and manages 18.8bn on behalf of its investors (as at 30 September 2018).
Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.
Quilter plc oversees £118.1 billion in customer investments (as at 30 September 2018).
It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions and discretionary fund management.
The business is comprised of two segments: Wealth Platforms and Advice and Wealth Management.
Wealth Platforms includes the Old Mutual Wealth UK Platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.
Advice and Wealth Management encompasses the financial planning network, Intrinsic; Quilter Private Client Advisers; discretionary fund management business, Quilter Cheviot; and Quilter Investors, the Multi-asset investment solutions business.
The Quilter plc businesses are being re-branded to Quilter over a period of approximately two years:
• The Multi-asset business is now Quilter Investors
• Intrinsic to Quilter Financial Planning
• The private client advisers business is now Quilter Private Client Advisers
• The UK Platform to Quilter Wealth Solutions
• The International business to Quilter International
• The Heritage life assurance business to Quilter Life Assurance
• Quilter Cheviot will retain its name
This press release is for journalists only and should not be relied upon by financial advisers or customers.
Past performance is not a guide to future performance and may not be repeated. Investment involves risk. The performance data does not take account of the commissions and costs incurred on the issue and redemption of shares. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested. Because of this, an investor is not certain to make a profit on an investment and may lose money. Exchange rate changes may cause the value of overseas investments to rise or fall.
This communication is issued by Quilter Investors Limited (“Quilter Investors”), Millennium Bridge House, 2 Lambeth Hill, London, United Kingdom, EC4V 4AJ. Quilter Investors is authorised and regulated by the Financial Conduct Authority.
Any opinions expressed in this communication are subject to change without notice and may differ or be contrary to opinions expressed by other business areas or companies within the same group as Quilter Investors as a result of using different assumptions and criteria.