Client Note – 2021 Review & Looking Forward
2021 was another reminder that forecasts are close to worthless. After a somewhat surprisingly positive year in 2020 one could have been forgiven for predicting negative returns in 2021. Not only did that not happen, 2021 turned out to be a very strong year for global equities.
Often what concerns investors is very different from what drives market behaviour as we have seen since Covid emerged in early 2020. As a result, the last two years has seen a surprising period of positive returns in financial markets generally. The reasons for these positive returns are many. Among them the introduction of Quantitative Easing by global governments, low interest rates which have resulted in no real return from deposits and bonds, coupled with the rapid expansion of technology on multiple fronts.
The table below provides a summary of 2021 returns for several major equity, bond, commodity and currency markets/indices.
|
2021 |
|
| Index, Currency, Bond |
Gain/Loss |
| MSCI World Index (€) |
29.26% |
| FTSE World Index (€) (x-US) |
13.20% |
| S&P 500 Index (€) (US) |
35.80% |
| FTSE Asia Pacific Index (€) |
4.50% |
| FTSE Emerging Markets Index (€) |
4.40% |
| Euro Stoxx 50 Index (€) |
21.00% |
| ISEQ (Irish Stock Exchange) |
15.66% |
|
|
|
| Gold Price (€) * |
3.30% |
| Commodities Index (€) |
37.10% |
|
|
|
| Dollar Trade Weighted Index |
6.40% |
| Sterling Trade Weighted Index |
5.20% |
| /$ Exchange Rate |
-7.00% |
|
|
|
| US 10-Year Bond Yield |
0.92% |
| German 10-Year Bond Yield |
-0.0039 |
* Gold is priced in US Dollars and when converted resulted in a -3.6% real return.