Updated: Jan 9
Jayson Moss, CFA
Chief Investment Officer
Market Update – Recent Conflicts
Geopolitical tensions increased considerably with the unprovoked invasion of Ukraine by Russia on February 24th. The globalized economy the world has known for the past four plus decades has been placed into question recently as supply chain disruptions resulting from the advent of COVID-19 have been exacerbated by the Russia-Ukraine conflict and resulting sanctions. As such, NATO and allied countries have been increasingly looking inward for solutions. The importance of food security, energy independency, insourcing productive capacity and defensive capabilities has never been greater. While the outcome of the Russia-Ukraine conflict is uncertain and highly unpredictable, it will undoubtedly have ramifications on the complexion of the global economy and the hierarchy of the global power players.
Given the fluidity of the conflict, attempting to tactically determine outcomes probabilisticly is a mug’s game. With that said, it is not unreasonable to expect continued inflationary pressure on goods and services, the potential for slower economic growth and possible tighter monetary and fiscal policy going forward, baring an all-out world war. Given our long-term approach to investing, we remain favorable on the U.S. economy and the position of the U.S. with its partners to drive economic growth over time. With this favorable long-term outlook in mind, we remain positive on equities compared to fixed income given the potential for a higher interest rate environment. However, we are cognizant of the elevated near-term risk profile of the global economy and the potential for slower growth from inherently higher risk economies given the backdrop of the rapidly evolving conflict in Ukraine. As such, we believe developed markets offer a more attractive risk-return profile over the near, medium and long term.
Considering the aforementioned factors, Evolve has reduced its exposure to emerging markets while increasing its holdings in domestic and developed markets, notably Canadian equities. In the same light, Evolve has rebalanced its alternative asset exposure to appropriately reflect the potential for continued inflationary pressures and heightened risks to global growth. Consequently, Evolve has reduced exposure to developing market real estate given it carries inherently higher risk and foreign currency exposure.
As always, if you should have any questions, please do hesitate to contact Evolve Wealth Advisors.
Jayson Moss, CFA
Chief Investment Officer
To learn more about Evolve Wealth Advisors, please visit our website at www.evolvewealthadvisors.com. Should you have any questions regarding your account or how Evolve Wealth Advisors can help with your future Estate or Retirement planning needs, please contact Peter Henry, CEO at 818-970-6940 or Patrick Kinney, COO at 503-490-0273.
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