Staying the Course: A nearly 20% return in US markets!

There’s been some relief on the geopolitical front. As of mid-May, the U.S. and China agreed to a 90-day tariff reduction—lowering U.S. tariffs on Chinese goods from 145% to 30%, and China's tariffs on U.S. goods from 125% to 10%. This temporary truce has helped calm markets, but the underlying tensions are far from resolved.  Expect more uncertainty from the Donald!  

Ongoing negotiations and global trade diplomacy remain crucial, and investors should stay alert to further developments.

Historically, geopolitical events such as trade tensions or sanctions can cast a long shadow over market sentiment, yet markets have repeatedly shown their capacity to digest, adjust, and move forward. The past decade offers numerous examples—from Brexit to the U.S.-China trade war in 2018—where markets initially stumbled before ultimately stabilizing. Each time, a diversified approach helped mitigate risks.

Understanding the broader context is key. Tariffs impact not just trade balances but supply chains, corporate earnings, and consumer prices. As these dynamics play out, Hoxton continues to monitor how these could impact your long-term portfolio positioning. 

We have actually made very little changes as believe that the market will figure things out - which they have!  Our investment approach accounts for uncertainty - we bake this into the portfolios that we build for clients, knowing full well that markets adjust and realign based on the long-term situations.  Most companies within these markets are great and will adapt and change to their environments over time.

Fixed income markets have faced headwinds. The recent U.S. tax and spending bill, expected to add nearly $3.8 trillion to the national debt over the next decade, has raised alarms about fiscal sustainability. This has led to a sharp sell-off in long-dated U.S. Treasurys, pushing yields on 20- and 30-year bonds to 5.03%—their highest levels in 18 months.

On the long-dated treasury funds that we hold, you will have seen them decrease in value over the past week and this is why.  Remember when yields go up the secondary market price of the existing bonds will go down.  Small changes in the yields, especially the longer-term yields can have big impacts.

This bond sell-off reflects broader investor concerns about inflation, fiscal prudence, and the future path of interest rates.

While this may unsettle some investors, it also highlights the value of active fixed income management. At Hoxton, we've adjusted bond durations and reassessed credit quality to navigate this environment. Shorter-duration and high-quality bonds remain integral to our strategy, especially for clients nearing retirement or seeking portfolio stability.

These instruments provide a degree of insulation against the impact of rising rates and offer steady income amidst volatility.  One such fund that we use a lot across our portfolios is the short-term liquidity fund.  This short-dated fund that has short-dated GILTS and T Bills offers a fixed return, as the duration of the underlying investments is small (typically under 6 months) the secondary market price remains steady.

The U.S. dollar’s recent weakness—driven by debt concerns, a Moody’s credit downgrade, and shifting global sentiment—has only amplified the need for diversification.

Another area that has been hit is currency.  Our hedging strategies have helped protect clients from adverse currency moves, reinforcing our stance which we took a couple of years ago.

Gold has reasserted its role as a safe-haven asset, recently climbing above $3,300 per ounce. Concerns about U.S. fiscal policy, political uncertainty, and dollar depreciation have pushed investors toward gold. Central banks and long-term investors continue to build positions, drawn by its enduring appeal in times of financial instability.

Gold’s value lies not in its yield—because it has none—but in its ability to preserve purchasing power and provide balance when markets are stressed.

Throughout history, from the oil crises of the 1970s to the global financial crisis of 2008, gold has served as a reliable hedge against big potential downsides. Its performance over the past few weeks only reinforces this role.

Whilst we don't hold huge amounts of this in our portfolios as it is an asset that is based purely on its speculative price, it does serve as a good asset to hold!

Bitcoin, too, has captured headlines—surging past $111,000 for the first time. This rally, underpinned by institutional interest and regulatory progress, reflects growing mainstream acceptance. Unlike the speculative bubbles of previous cycles, this rally is supported by demand from institutional investors.

Companies incorporating Bitcoin into their treasuries, along with clearer regulatory frameworks, suggest that crypto is increasingly seen not as a fringe asset, but as a legitimate alternative store of value.

While we do not invest in cryptocurrencies, we acknowledge their growing role in modern portfolios and remain informed on developments that may influence broader market sentiment. It’s important for investors to understand both the opportunities and the risks associated with such assets.  

It is still a very volatile asset, produces no earnings or yield and is purely driven by speculation on the price.

One often overlooked component of successful investing is investor psychology. The emotional toll of market swings can be significant (as we have seen over the past couple of months), leading many to make impulsive decisions that undermine their long-term goals.  Thankfully hardly any Hoxton investors sit within this camp!

If you sell out during the hard times, we know it is extremely unlikely that you will be there to participate in the best times.

April 9th alone delivered the year's strongest daily gain. Remove just that one day, and year-to-date performance would flip from marginally negative to sharply down.

This is a big lesson in discipline. Emotional reactions to short-term volatility can derail long-term plans very easily as the graph below illustrate. And while it’s natural to feel unsettled during periods of turbulence, history continues to show that patience, not panic, pays off.

At Hoxton Wealth, we remain focused on the bigger picture. We believe that thoughtful diversification and strategic asset allocation are more important than reacting to every market headline. The portfolios we build are designed for resilience, and our long-term strategy is proving its worth once again.

Behavioural finance has shown time and again that our instinctive reactions—fear during downturns, greed during rallies—can be counterproductive.

At Hoxton, we prioritize client education and regular communication precisely to counter these tendencies. We believe that understanding the 'why' behind market movements helps investors stay calm and focused. It's not just about having a strong portfolio; it’s about having the conviction to stick with it through uncertain times.

We encourage regular portfolio reviews not as an excuse to change strategies impulsively, but as an opportunity to reaffirm goals, assess risk tolerance, and reinforce the principles that underpin successful investing. That process—grounded in education, empathy, and discipline—is part of the value we strive to provide every client.

Three bear markets in five years may seem extreme—but in the context of financial history, they are not without precedent.

Each downturn teaches us something new but also reinforces long-held lessons. The dot-com bubble of the early 2000s, the 2008 financial crisis, and the COVID-induced crash of 2020 all presented daunting headlines. Yet each was followed by recovery.  Some longer than others - but each time markets rebounded and recovered.

Investors who remained diversified and have assets to cover off any short-term cash needs avoided reactionary decisions.  Which meant they fared the best!

For example, those who held international equities during the 2000s “lost decade” for U.S. stocks saw more robust returns. The lesson is clear: no single market leads forever, and spreading exposure globally remains a cornerstone of sound investing.

Markets may falter, but economies adjust, businesses innovate, and new growth cycles begin. The past 100 years of market data offer one overwhelming takeaway: perseverance wins.

We’ve seen time and again that markets are cyclical. Volatility, whether driven by politics, policy, or global events, is part of the journey. What matters most is not the day-to-day noise but the strength of the strategy underpinning your portfolio.

At Hoxton Wealth, our mission is to guide clients through these fluctuations with clarity, calm, and a long-term mindset. The recent rebound is a powerful validation of that approach. For those who stayed invested, the recovery is tangible. For those still feeling uneasy, we encourage a conversation with your adviser.

As always, a diversified portfolio aligned with your goals and supported by professional guidance remains your best ally. If you have questions or would like to revisit your strategy, please reach out to our client service team. We're here to support you - through every market cycle.

Stay diversified. Stay invested. Stay confident.