In 2017, where did money get made and lost?

So, where did savvy investors find success in 2017? With cash holdings offering little attraction due to low returns, investors were forced to be adaptable in their pursuit of decent returns while balancing risk and rewards. Martin Bamford, a chartered financial planner at Informed Choice, concurred that keeping money in cash was likely the least appealing option in 2017. “Despite interest rates starting to rise in the UK, cash returns remain pretty dismal, and rising price inflation in the UK will have eroded the buying power of cash again this year.”

Premium Bonds: Given the unimpressive returns on cash deposits, the appeal of NS&I Premium Bonds increased, especially for ultra-low-risk investors, with an increased investment limit of £50,000 introduced in 2015.

Playing the Markets: However, 2017 was not a year for the ultra-cautious. Bamford explained that it was a positive year for nearly every major asset class, with Global Emerging Markets being the top performer, delivering close to a 25% return. Other strong performers included Europe ex UK (+24%), Japan (+18.5%), and UK All Companies (+15.5%).





Indices: Equities proved to be an excellent investment, with strong performances from the FTSE and Dow Jones, despite occasional dips. Many global markets experienced growth, with the Mongolian benchmark surging over 110% since January.

Trackers: Index-tracking funds, which mimic stock market index performance (e.g., FTSE 250 or S&P 500), offered an attractive and cost-effective option for investors. Given the upward movements of most indices, investors generally profited.

Funds: Considering the buoyant global stock markets in 2017, equity funds were attractive. The top five funds of the year (excluding tracker funds) were Legg Mason IF Japan Equity, T Rowe Price Global Technology Equity, Baillie Gifford Greater China, Ashburton Africa Equity Opportunities, and Alquity Indian Subcontinent fund. The Legg Mason fund was the top performer among these, with a 46.98% return.

Currencies: The Euro outperformed, rising by 12% against the US Dollar. Sterling had a volatile year due to Brexit uncertainties. While it reached its lowest point against the dollar in January, it saw an improvement by year-end but remained relatively weak compared to previous years.

Cryptocurrencies: Bitcoin, in particular, garnered significant attention in 2017. Its valuation skyrocketed, rewarding early investors who saw its value rise from $775.25 in December 2016 to $16,699 by December 2017. However, Bitcoin’s extreme volatility led to varying opinions about its long-term viability.

Commodities: Palladium stood out in 2017, experiencing a 40% price increase due to increased demand in the automotive industry. Gold had a volatile year but saw periods of price growth. Crude oil had its ups and downs, starting and ending the year with fluctuations.

Fixed Income: Surprisingly, fixed-income securities showed positive returns in 2017, despite concerns about rising interest rates. Sterling High Yield Bond, Sterling Corporate Bond, and UK Gilts recorded average gains of 7.8%, 5.5%, and 1.9%, respectively.

Looking Ahead: As we approach 2018, questions linger about whether equity markets will continue to rise and whether Bitcoin’s bubble will burst. It remains uncertain whether bold investments or cautious strategies will dominate the year ahead. Time will reveal the answer.

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