While many of us enjoy an international holiday this summer it might be timely to talk about countries!

Recently, there’s been a lot of noise around which country one should invest their savings in for the best growth, and the idea of allocating away from the US for many reasons. In the first half of 2025, developed markets outside the US returned 19.0%, outperforming the US and emerging markets. But that outcome masks the wide range of returns across individual countries, from Spain’s 43.0% to Denmark at −5.5%. This kind of dispersion isn’t unusual—it’s a defining characteristic of global investing.

On average, the difference in return between the best- and worst-performing country exceeded 43% over the past 10 calendar years. It’s no wonder investors may be tempted to chase recent winners or try to avoid losers. However, there’s little evidence that timing strategies consistently pay off. Country returns can turn quickly. For example, Canada posted the worst returns in 2015, down over 24%, but was the top performer in 2016, up over 24%. An investor who lost patience at the end of 2015 potentially missed out on the subsequent market recovery.

Country volatility is a normal part of global investing. Fortunately, as 2025 illustrates, investors in a globally diversified portfolio can benefit from international diversification without risking getting on the wrong side of country swings.

Considering how dire the headlines and stock price moves appeared to be in April with the Tariff headlines I know it’s tempting to move to the sidelines and delay making investments or even sell and wait and see how things develop with a view to ‘re-entering the market’ when valuations might be more attractive and the outlook clear. The problem is the evidence suggests that approach rarely works out! With new record highs being made in the US stock market last week I thought it’s worth reflecting on this.

The impact of being out of the market for a short time can be profound, as shown by this hypothetical investment in the MSCI World Index, a broad Global stock market benchmark.

• A hypothetical £1,000 investment made in 2015 turns into £3,214 for the 10-year period ending December 31, 2024.
• Miss the MSCI World’s best week, and the value shrinks to £2,940. Miss the best three months, and the total return falls to £2,498.
• There’s no proven way to time the market—targeting the best days or moving to the sidelines to avoid the worst. Staying invested and focused on the long term helps to ensure that you’re in position to capture what the market has to offer.

As we have all noticed in recent weeks elections generate lots of headlines. So it might seem like an important consideration when making investments Vanguard have analysed the performance of a balanced portfolio of 60% UK shares and 40% UK bonds between January 1987 and May 2024. During that time, there have been 10 general election periods in the UK (including the election on 4 July). They looked at portfolio performance in the period from the five months before each election to the five months after and then compared this with performance during other times and found no statistical difference in portfolio performance!

They also analysed the performance of UK and global stock markets between January 1995 and December 2023, during which period there were seven general elections. The chart below shows that the elections had a minimal impact on stock market performance.​

I am sure you are likely aware of the Bank of England increase to interest rates from 2.25% to 3% yesterday.

We are often asked about Interest rate expectations given that many of our clients have mortgages.

It may be somewhat reassuring that the Bank of England expect key measures of inflation to fall moving forward.

Here a few interesting graphs:

The weather certainly feels like it has changed recently, hence I wanted to send an update on investment markets.

The battle against inflation has continued, Central Banks pushed through more Interest Rate hikes last month, the market barely flinched. Still firmly entrenched in Emergency Mode, interest rates will continue to rise until prices start to fall, which if course is going to have consequences for growth. A rate environment like pre-crisis is the most likely outcome, but there is going to be a fair bit of pain before we get there: ​

Markets have begun plotting a path to recovery. Yet, the economy is in a dire state with significant uncertainty.

We work with you and the best investment management teams to achieve your objectives.

Hear directly from Morningstar who explain where they see opportunities ahead.​

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As you are undoubtedly aware, the U.K. election has been announced for December 12th. This is likely to be the biggest—perhaps only—talking point between now and Christmas, so I wanted to offer some substance behind our actions (or in this case, inactions).

Let us be clear, while these are uncharted waters, political uncertainty is nothing new. On this occasion, as in the past, people will jump over themselves to tell you the “right way”. Whether we are judging the merits of the candidates or working through our investment positioning, we must favour research over reaction and urge all our clients to do the same. Chief among these is the temptation to react too quickly or with too much confidence in the lead up to the outcome of this significant event.

If you are cynical of this stance, I share the below quotes from the U.S. election and Brexit referendum, where even the smartest of people got it grossly wrong.

> Incorrect U.S. Election Predictions (U.S. stocks rallied 2.22% on the day after the election and around 9% in the three months following)
“We would expect a small global stock market rally if Clinton wins (about 2 percent) and a large decline if Trump wins (about 10 percent)”. Eric Zitzewitz, Professor of Economics at Dartmouth College

“The S&P 500 will fall by 3% to 5% immediately if Trump is elected”. Tobias Levkovich, Citigroup's chief U.S. equity analyst

“If investors are wrong and Trump wins, we should expect a big markdown in expected future earnings for a wide range of stocks – and a likely crash in the broader market.” Simon Johnson, professor at MIT Sloan and former chief economist of the IMF

> Incorrect Brexit Referendum Predictions (U.K. stocks fell 3.15% the day after the referendum but gained around 13% in the six months following. Economic growth also continued to rise) “A vote to leave would tip our economy into year-long recession with at least 500,000 UK jobs lost”. George Osborne, served as Chancellor of the Exchequer under Prime Minister David Cameron

“Leaving Europe would tip the country into recession”. David Cameron, ex-Prime Minister UK

“Brexit would trigger recession”, predicted -0.3% GDP for Q3”. IMF Forecasts

“Short term impact of -1.25% GDP”. OECD Forecasts

“It would be likely to have a negative impact in the short term… I certainly think that would increase the risk of recession”. Mark Carney, Bank of England

> What about a Corbyn government?

Political biases aside, two of the widely quoted risks to investors seems to be in a Corbyn government or a hung parliament. It is easy to build an ugly bear case—no matter which scenario you look at—and we are mindful that the media will take full advantage of this fear-driven sentiment (they want to sell newspapers after all). We urge investors to keep a level head, and while these issues have substance, investors should look through media exaggeration as political risk is largely unpredictable. It is for circumstances like this that we take a diversified approach. We don’t go “all in” on a given outcome, because we can limit the risks by spreading your eggs across multiple baskets. We have global exposure, defensive exposure and different currencies, to name a few, which would all help buffer any election risks.

Last, we leave you with a few key points.

1. The key question on many investors lips is whether they should sell, hold or buy. To our eye, the answer is simple… manage risks, stay informed and—if in doubt—stay the course.

2. Any turbulence in markets may create great opportunities to purchase assets that will add meaningfully to returns in the future. We are not there yet, but we will look at this opportunistically.

3. We appreciate that the current period is very unsettling for investors and will cause debate among your families. We will do our utmost to support our clients during this time.

I appreciate it's a Friday afternoon before the bank holiday but given the PM's depature set for June 7, the outcomes for Brexit are developing quickly.