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Patrick Cairns

Patrick Cairns

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  Interesting article indeed. Reading the very latest Monthly report from the Orbis guys puts a dismal picture on actively managed funds as well. To pay 2.09% for an actively managed balanced fund that...  

How global stock markets performed in 2015

A tough year for investors.

There was very little for equity investors to get excited about last year. Positive returns were hard to come by in most markets around the world.

The MSCI All Country World Index, which covers a broad universe of both developed and emerging markets ended the year 4.35% lower. This is a good indication that the environment was generally negative across the globe.

The MSCI frontier markets and MSCI emerging markets were sharply lower, while the S&P Developed BMI, which covers all the major developed markets, also ended the year below where it began.

As the below graph shows, many of the world’s major indices were down over the last 12 months.

Patrick 1

Indices that were negative in 2015

Source: Bloomberg, S&P Dow Jones Indices 

The biggest losses were felt in frontier markets – the likes of Nigeria, Kuwait, Morocco, Argentina and Pakistan. Generally these markets are feeling the effects of investors shying away from riskier assets and currency weakness in the face of dollar strength.

Emerging markets were also generally under pressure. Once again exchange rates had a big role to play, exacerbating losses in local currency and turning many gains into negative returns once they were converted into dollars.

Brazil’s Sao Paulo Stock Exchange Index was the weakest of any of the major emerging markets. It dropped 10.64% when measured in Brazilian real, but since the currency fell 32% against the dollar over the same period, investors in dollars saw negative returns of close to 40%.

India was the world’s darling market in 2014, but lost that momentum last year. After gaining 33% the year before, 2015 saw the index shedding 6.19%.

However, the Indian rupee was one of the few emerging market currencies that did not depreciate significantly against its US counterpart last year. That meant that, in dollar terms, it was one of the most stable equity markets amongst the world’s emerging economies.

The FTSE in the UK has now seen two negative years in a row. It is currently trading at the same levels it was in late 2012.

Last year also saw the end of the major bull market on wall street. After gaining 63% between the start of 2012 and the end of 2014, the S&P 500 was effectively flat in 2015.

Indices that were positive in 2015

Patrick 2

Source: Bloomberg, S&P Dow Jones Indices

The positives in global equity markets were rather few and far between. Perhaps the most encouraging spots were Europe and Japan, where investors could have seen some gains.

The local market was marginally up in rand terms, but those investing in US dollars had a very different experience. The swift depreciation in the local currency meant that the ALSI fell over 22% in dollar terms between January and December.

The Shanghai Composite in China ended the year 9.41% higher, despite the 45% decline it suffered in just two months in the middle of the year. However, those gains were more muted in dollar terms due to the devaluation in the yuan.

The Russian MICEX was a bright spot in local currency terms, gaining over 26%. However, in dollar terms that was almost entirely wiped out by the 18% depreciation in the ruble over the year.




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Interesting article indeed. Reading the very latest Monthly report from the Orbis guys puts a dismal picture on actively managed funds as well. To pay 2.09% for an actively managed balanced fund that loses money is a reward system that just cannot be right. 1% is ok but 2.09% … that seems like greed. I think for the first time, as far as I can remember Orbis show a performance graph before fees. The only reason to do this is because the before fees position is so very different to the after fees position. Seems like this is going to be another Pick ‘n Pay story, as the next generation try and match the founding generation’s performance.

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