The year 2021 is behind us: the year that we both started and ended in a lockdown. Despite this, it was another good investment year. In this blog we will provide you with a brief overview of what happened to the stock market last year and hence to the pension capital.
The year of the economy reopening
The global reopening of the economy in 2021 made for a good investment year with good investment returns. But we did see clear differences between the different asset classes.
Positive returns on equities
Developed market equities performed well. Increasing demand meant we saw good returns here. In some places demand was much greater than supply. This was good for share prices, but also led to high inflation. Emerging market equities fared less well, which was largely due to developments in China. Strict rules were imposed on tech companies, and the financial problems of Chinese real estate giant Evergrande and the associated fear of a tsunami of financial problems had a negative effect on returns.
Difficult year for bonds
Bonds struggled in 2021. Central bank policies and rising inflation pushed up interest rates. This resulted in negative yields on government bonds at the end of the year. The rise in US interest rates and ongoing uncertainty about COVID-19 also resulted in negative returns on emerging market government bonds. Corporate bonds showed a flat line, while high-yield bonds did eventually show a positive return.
A good investment year
All in all, 2021 – like 2020 – will go down in the records as a good investment year. But we don’t yet know what the future will bring for the stock market. A new variant of the COVID-19 virus could cause further uncertainty, as we saw with the Delta and Omicron variants.
When you invest, you always run the risk of negative returns, especially after years of high returns. It is important to bear in mind that we invest for pension accrual and therefore for the long term. BeFrank’s investment principles have been designed for both good and bad times.
Constant insight into investment returns
Did you know that employees can keep track of their investment returns 24/7 with our app and on their personal pension page? Handy!
We have compiled this information for you with great care, you cannot derive any rights from it.