Another Week, More Headlines: The Pound Is Up Against the Dollar. Same Strategy.
Let Me Cut Through It
Recent moves in the bond markets, fuelled partly by the Trump headlines and the US rate narrative, have sent the pound climbing against the dollar.
It has added to the usual swirl of headlines, and prompted a few questions from clients around why US funds might appear a little flat in sterling terms right now.
So let me cut through it.
While a stronger pound does mean that sterling returns on US funds might be a bit muted in the short term, and the weakening dollar accentuates that, it is simply currency noise.
Trying to predict short-term FX movements is about as useful as trying to pick the best-performing stock each morning.
What we are seeing is temporary. Over time, currency fluctuations net out.
If they did not, the data in the Matrix Book would not look the way it does, and I would not have spent the last 20 odd years standing by it.
The Historical Evidence Is Clear
The S&P 500, FTSE 100, and Russell all saw sharp falls of 30 to 35% during the last crisis. Yet they all rebounded.
The FTSE roughly doubled. The S&P soared by around 600%. The Russell 2000 surged about 250% from its 2009 low.
These are not anomalies. They are proof of how resilient quality equities can be and why we stay invested in our global model.
Our strategy, with its deliberate tilt toward value-cap and small-cap companies across both developed and emerging markets, gives us exposure to these long-term growth stories.
These companies do the heavy lifting over time. And even when prices wobble, the dividend income still flows. And we have our bond element to cushion the temporary price gyration.
Should We Make Tactical Decisions Because the Pound Is Strong?
No. That is just another version of market timing, something I have warned against more times than I care to count.
Instead, we stay disciplined. We stay diversified. And we stay invested.
The message, as ever, is really simple.
Nothing needs to change. This too shall pass. And what you have got is built to deliver.
It just needs to be left, to do its thing.
If you would like to talk this through, we are always here.
Contact us today or call 0345 200 4041 to arrange a free consultation.
Originally Penned on 18 April 2025
