Wealth manager London & Capital has updated its captive indices to reflect the fourth quarter of 2014.
The indices examine the long-term trend of three typical asset allocations across a ten-year cycle, allowing captive insurers to have a point of reference to benchmark the performance of their investment strategies.
According to the wealth manager, in the last quarter of 2014 ‘disinflation’ re-entered the global economic lexicon, with a sharp collapse in oil prices putting significant downward pressure on inflationary expectations.
It added that one of the biggest beneficiaries of the fall in the oil price is likely to be the US and especially the US consumer sector which represents a large part of the economy.
“Disinflationary forces are also helping to keep the Federal Reserve’s finger off the monetary trigger, resulting in the expectation that, despite strong macroeconomic data, they are unlikely to increase interest rates until the second half of 2015,” said London & Capital.
It appears that in the Eurozone, deflation is on the horizon, with GDP figures for the third quarter of 2014 showing growth of only 0.2 percent.
The Captive Indices with the greatest exposure to equities and longer dated bonds performed best in the fourth quarter and during 2014 in general.
The wealth manager said: “With limited exposure to risk assets, Index 1 underperformed versus its 10 year average annualised return. The comparison to Index 3, which significantly outperformed its long term average return, underlines the impact a larger equity allocation has had in the past couple of years.”
London & Capital, Europe, Insurance, North America