This is part of our quarterly plan performance series. Catch up on last quarter’s summary here: How PensionBee’s plans are performing in 2023 (as at Q2).
Broadly speaking, global stock markets suffered in Q3 of 2023 (the period between July and September), after strong gains in the first half of the year. The value of UK government bonds also trended downwards, as interest rates continued to increase. Shares in energy companies were resilient in Q3, as investors sought refuge in sectors that were seen as being more insulated from the rising interest rates and inflation that were dampening optimism in the broader investment market.
In contrast, the value of stocks in other sectors fell during this period, including the big players in the technology sector, known as the ‘Magnificent Seven‘. The Magnificent Seven comprises Apple, Microsoft, Amazon, Alphabet (Google’s parent company), Nvidia, Meta (Facebook’s parent company), and Tesla. These companies make up the holdings in some of our PensionBee plans too. Although these companies have been some of the best performers on the stock market in recent years, they came under pressure last quarter as investors worried about the potential impact of a recession on their earnings.
The outlook for global bond and stock markets for the remainder of the year is uncertain, but there are positive signs. Inflation may be starting to peak, and if central banks slow the pace of interest rate hikes, this could boost investments.
Keep reading to find out how global markets and our PensionBee plans have performed over 2023 so far.
2023 figures cover the period between 1 January and 30 September 2023.
This blog is only meant to provide information. The data comes from our money managers or plan factsheets. Performance figures are before fees. Past performance isn’t an indicator of what will happen in the future. As with all investments, capital is at risk.
Company shares in 2023 (as at Q3)
What are company shares?
Company shares are units of ownership in a company. When a company wants to raise money, it can issue shares to investors who pay a certain amount of money for each share. By buying shares, investors become part-owners of the company and can enjoy its profits or growth. But, they also take on the risk of a decline in share prices if the company performs poorly or goes bankrupt. Company shares are also known as stocks or equities, and they’re commonly traded on stock markets.
Global stock markets
When businesses have to pay higher interest rates on their loans, it can eat into their profits and reduce their share price. Also, when investors can get a guaranteed return on their money with cash savings or bonds, they may be less likely to invest in company shares, which can also drive down share prices.
Despite the rising interest rates and other challenges facing the global economy, there have been some successes in global stock markets. As the ‘artificial intelligence gold rush‘ is underway, the big technology companies have positively contributed to many investments.
| Index | Investment location | Performance over 2023 (%) | Equity proportion (%) |
|---|---|---|---|
| FTSE 250 Index | UK | -3.0% | 100% |
| Euro Stoxx 50 Index | Europe | +10.0% | 100% |
| S&P 500 Index | North America | +11.7% | 100% |
| Hang Seng Index | China | -10.0% | 100% |
Source: BBC Market Data
PensionBee’s equity plans
| Plan | Money manager | Performance over 2023 (%) | Equity proportion (%) |
|---|---|---|---|
| Fossil Fuel Free Plan | Legal & General | +9.1% | 100% |
| Shariah Plan | HSBC (traded via State Street Global Advisors) | +19.7% | 100% |
| Impact Plan | BlackRock | -8.6% ^ | 100% |
| Tailored (Vintage 2061 - 2063) Plan | BlackRock | +9.2% | 100% |
| Tailored (Vintage 2055 - 2057) Plan | BlackRock | +9.2% | 100% |
| Tailored (Vintage 2049 - 2051) Plan | BlackRock | +8.7% | 96% |
| Tailored (Vintage 2043 - 2045) Plan | BlackRock | +7.5% | 85% |
| Tracker Plan | State Street Global Advisors | +8.0% | 80% |
| Tailored (Vintage 2037 - 2039) Plan | BlackRock | +5.7% | 72% |
| Tailored (Vintage 2031 - 2033) Plan | BlackRock | +4.4% | 59% |
| 4Plus Plan | State Street Global Advisors | +3.4% | 52% ^^ |
^Performance from inception (on 15 February 2023) to 30 September 2023.
^^Equity % at 30 September 2023, as changes on a weekly basis due to actively managed components.
Investment performance is taken from money manager factsheets. To view the factsheets, please visit our Plans page. All performance is reported in gross figures and may not take account of fees associated with certain investments. Past performance is not an indicator of future performance. Capital at risk.
Equity content refers to the amount of exposure each plan has to global stock markets and other listed risk-on assets, such as property and commodities.
Bonds in 2023 (as at Q3)
What are bonds?
Bonds are a type of investment where you lend money to an organisation, like a government or company. In return, they agree to pay you back with interest over a period of time. A bond yield is the annual return that an investor gets from a bond. This type of investment is considered to be lower risk than company shares, because you usually know how much money you’ll get back. Bonds can be a good option for people who are approaching retirement and need a steady stream of income. Bonds are also known as fixed-income securities.
Global bond markets
Interest rates and bond values have an inverse relationship, meaning that when one rises in value the other falls. Central banks have been raising interest rates aggressively in an effort to combat inflation but, there are signs that inflation may be starting to peak. For example, the UK’s rate of inflation fell to 6.7% in September 2023, a substantial drop from the 40-year high of 9.6% in October 2022, which is good news for bonds.
| Fund | Source | Performance over 2023 (%) | Fixed-income proportion (%) |
|---|---|---|---|
| Schroder Long Dated Corporate Bond Fund | Morningstar | -3.8% | 100% |
Source: Morningstar
PensionBee’s fixed-income plans
| Plan | Money manager | Performance over 2023 (%) | Fixed-income proportion (%) |
|---|---|---|---|
| Pre-Annuity Plan | State Street Global Advisors | -3.4% | 99% |
| Tailored (LifePath Flexi) Plan | BlackRock | +2.5% | 60% |
| Tailored (Vintage 2025 - 2027) Plan | BlackRock | +3.2% | 48% |
PensionBee’s cash plans
| Plan | Money manager | Performance over 2023 (%) | Fixed-income proportion (%) |
|---|---|---|---|
| Preserve Plan | State Street Global Advisors | +3.3% | 96% |
Investment performance is taken from money manager factsheets. To view the factsheets, please visit our Plans page. All performance is reported in gross figures and may not take account of fees associated with certain investments. Past performance is not an indicator of future performance. Capital at risk.
Summary
You may find yourself wondering how inflation could impact your retirement savings or even rethinking your pension savings during the cost of living crisis. PensionBee customers can have peace of mind knowing that our pension plans are being managed by some of the world’s biggest money managers. Again, it’s worth remembering that it’s normal and expected for pensions, as long term investments, to go up and down in value over time.
Try our inflation calculator
A rise in inflation happens when the price of goods such as food, transport and living costs, like electricity, rise. Changes to inflation not only impact what you can afford today but also what you can afford in the future.
Savings like your pension aren’t immune to these changes and if your pension value remains the same, this decreases your purchasing power in the future, which over time could mean that your pension savings might not get you as far as you’d hoped. Use our Inflation Calculator to find out how your pension could be impacted.
This is part of our quarterly plan performance series. Check out the next quarter’s summary here: How PensionBee’s plans are performing in 2023 (as at Q4).
Have a question? Get in touch!
You can check out our Plans page to learn how your money is invested in different assets and locations. You can always send comments and questions to our team via engagement@pensionbee.com.
Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
