It’s been an eventful few months in the markets, so we wanted to explain what’s been happening and what we’re doing to keep your investments aligned and working hard for you.
Alongside our usual market update, we’re taking a moment to explain how we keep your portfolios aligned and on track through a process called rebalancing.
📈 What’s been happening in the markets?
Over the past quarter, markets have responded to three main themes:
- Interest rates: Central bankers continue to walk the fine line between keeping inflation under control (not too high, or too low), without stalling economic growth by ensuring it’s not too expensive for companies, and people, to borrow.
- Global trade tensions: A hallmark of the Trump era, tariff threats and proposed pauses remain key drivers of daily market movements and volatility. Throughout May, renewed talks between the US, China, and the EU have improved global sentiment.
- Strong corporate earnings: Strong S&P 500 earnings from US companies, especially in tech and luxury goods, posted strong year to date results, helping fuel a May rebound.
🔄 How does this affect your portfolio?
So let’s take things back a step…how do investment portfolios work?
When you invest with us, your portfolio holds a mix of funds across different regions and asset types, each selected to play a specific role, such as investing in the shares of companies located in a particular country or region.
As your investment manager, our team of experts ensures that each portfolio is well balanced with specific allocations to each fund, and by extension, to each country or region. Let’s call this desired allocation to constitute a “perfectly balanced” portfolio.
As the year so far has shown us, investment funds don’t stand still and change day by day, which can add up over time, and left unchecked, your portfolio would slowly drift out of alignment with your original strategy, and we need to rebalance it.
Here’s an example: Over the past five years, the US stock market (as measured by the S&P 500) has grown by 98%, but other funds haven’t grown by the same amount during that time. Without rebalancing, that strong performance would cause the US portion of your portfolio to grow larger than intended, quietly shifting your exposure and risk. This is known as strategy drift, and it’s exactly what rebalancing is designed to prevent.
✅ What we’re doing
To prevent drift, we rebalance.
That means we check each fund’s current share of your portfolio and compare it to the target we’ve set. If there’s a difference, we’ll buy or sell as needed to bring things back into balance.
This is not about reacting to the news or chasing performance. It’s about making sure your portfolio stays in line with your long-term goals and the level of risk that’s right for you.
🛠️ What happens next?
You don’t need to do anything. We handle this process automatically and with care. It’s one of the quiet but important ways we manage your investments.If you have any questions or would like more insights, we’re always here to help.
