Economic conditions improved further since the beginning of the year. This was reflected in equity markets which, despite the political noise emanating from the US and Europe, have performed strongly over the quarter. However this strong growth has also seen the return of inflation, both in New Zealand and globally. Existing bond prices fell as markets factor in the growing likelihood of increases in interest rates to counter inflationary pressures.
This quarter's article focuses on the importance of diversifying across different asset classes, not just within them. Recent volatility in particular markets following political events has reminded us of the importance of investing in a range of different types of assets and markets.