CHAIRMAN'S LETTER: To our shareholders

As I reflected on the last year, something felt different
about 2018.

I was struck throughout the year by the number of people who approached me asking what they should do with their money. These were individuals I met in grocery stores, at the gym and during meetings, in places like Mexico City, Zurich, Tokyo and right at home in my neighborhood in New York City. Some were investing for themselves, others on behalf of thousands upon thousands of beneficiaries for public and private pension funds. There was anxiety and uncertainty in the voices of the people that I spoke with.

What was it about last year? In the markets, there was a heightened sense of uncertainty. The year began with equity markets at record highs, which persistently moved downward throughout the year, and investors’ fears of a recession intensified. Markets have experienced bouts of volatility several times over the last decade. But last year – for only the second time in the past three decades – global stock and bond markets both delivered negative returns. While US short-term rates surpassed 2%, making cash a more profitable placeholder investment, that return is not enough to sustain the long-term objectives of most savers.

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