Review of Q2 2023

Market Returns – a whistle-stop tour of some of the movers and shakers during the quarter.

The chart shows the returns in local currency across the major global equity indices.

The table below shows Investment Association sector average returns broken down by asset class and geography, this time in sterling. Overseas equities broadly, enjoyed a positive quarter, led by the US. The strength of sterling vs. overseas currencies has been a real headwind for UK investors.

It has been a mixed quarter for asset classes. US, global and Japanese equities and UK physical property enjoying positive returns with the remainder, in negative territory. Fixed income, except for high yield (which has a higher correlation to equities than other areas of fixed income), was particularly hard hit. UK equities also underperformed.

The following table shows the winners and losers in terms of the industrial sector for the quarter in local currency:

Sectors that have been the darlings over the last decade returned to the spotlight, technology produced double-digit returns over the quarter, closely followed by consumer discretionary (which hides within it names such as Tesla and Amazon). Last year’s winners found themselves relegated to the bottom of the table.

The style switch from value to growth, that we noted previously, continued its winning streak in the second quarter of 2023. Growth stocks, which have been leading markets for the last decade, fell out of favour last year, but the style continues to push higher throughout 2023.

Fixed Income

It has been another volatile quarter for fixed income, particularly for index-linkers, who finished the quarter at the bottom of the pile; only high yield was in positive territory. We continue to use strategic bonds but have reduced short-dated fixed income funds and have tentatively started to increase duration; the fall in fixed income markets provided an opportunity to add to select pockets of value within fixed income.


Sterling continued its onward march and reigned supreme in the second quarter of 2023. Whilst the story of 2022 was a strong US dollar, particularly against sterling, year to date sterling is in vogue.

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