The S&P/ASX 200 (ASX: XJO) drifted lower over the week, down 0.2%, while all three US benchmarks also retreated across the five days.
Here are my three key investor takeaways from the week.
The beginning of the end
The week may well mark the beginning of the end of investing as we know it.
After more than a decade of expansionary monetary policy, the Federal Reserve flagged a clear intention to unwind its balance sheet. This involves letting any maturing government bonds it owns mature and not reinvesting the proceeds as it has for many years.
Ultimately, the result should be higher bond yields, interest rates and generally less liquidity in the market. This has already seen bond investments suffer their worst selloff in history and may well occur at the same time that demand is being destroyed by high oil prices, increasing the risk of a recession.
Searching for relevance
Perpetual Limited’s (ASX: PPT) bid for junior player Pendal Group Ltd (ASX: PDL) was the highlight of the week, with Platinum Asset Management Ltd’s (ASX: PTM) 15% drop on Friday potentially the lowlight.
Most fund managers, particularly value-focused managers suffering even short-term underperformance, are continuing to struggle for relevance in an environment where low-cost ETFs are dominating flows and pressure grows for fee reductions.
Lightning rods
It wouldn’t be a wrap without mentioning Elon Musk and his decision to buy as much as 9% of Twitter (NYSE: TWTR).
The investment is US$3 billion of his reported US$300 billion in net worth, but has attracted headlines across the world for what it means for the future of social media. As always, headlines tend to get ahead of the story.
