published Oct 25, 2018, 12:16:29 PM, by Todd White and Natasha Doff
(Bloomberg) —

The October stock rout has delivered a wake-up call to money managers searching for shelter this year.

Swelling dollar funding costs, equity volatility and fissures in the synchronized growth story are punishing assets across the globe.

A month ago, U.S. stocks were one of just a handful of markets that had doled out a decent return in 2018 — before $2 trillion was wiped off their value in the space of a few weeks. On Thursday, the S&P 500 Index pared some of those losses, led by a recovery in technology companies.

European shares are in worse shape. The Stoxx Europe 600 Index has shed over 10 percent this year in dollar terms. Meanwhile, cash has dethroned risk assets, with an index of U.S. Treasury bills returning 1.4 percent.

“So much for gains on my investment portfolio this year,” wrote Bill Blain, strategist and head of capital markets at Shard Capital in London, in a note.

On the current trajectory, investors will be left with just the dollar and crude oil as the few major asset classes to eke out a decent gain for the year. Treasuries and a few pockets of the credit world are still in the green.

“We’ve had self-inflicted wounds, from the trade war to Italy’s budget — all of these have hurt,” said Craig Erlam, analyst at securities firm Oanda Corp. in London. “While Brexit and Italy will mostly solve themselves, the trade war looks like it will last longer.”

Life is bleaker for multi-asset investors in real terms. By that metric, 2018 was already on track to deliver the lowest share of positive returns across 17 asset classes since 2008, according to Morgan Stanley data last month.

To contact the reporters on this story: Todd White in Madrid at twhite2@bloomberg.net ;Natasha Doff in Moscow at ndoff@bloomberg.net To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net Sid Verma, Yakob Peterseil
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