Investment markets are constantly evolving, but there are periods when the environment changes sufficiently that investors need to reconsider some of the assumptions that have worked well in the past.

We believe we are in one of those periods.

For much of the past decade, investors benefited from generally supportive conditions: low interest rates, relatively low inflation, increasing globalisation and strong returns from many of the world's largest companies.

That environment also provided a strong backdrop for passive investing. When markets are broadly rising and a relatively small number of large companies are driving returns, simply owning the market can be a very effective strategy.

Today, however, the investment landscape is becoming more complex.

Geopolitical tensions, higher energy and oil prices, changing interest-rate expectations, persistent inflationary pressures and shifting global trade relationships are creating very different outcomes across countries, industries and individual companies.

At the same time, valuations in some parts of global markets remain high.

We believe this combination makes selectivity increasingly important.

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Active Doesn't Mean Predicting the Market

Active investing is sometimes misunderstood as trying to predict whether markets will rise or fall next month.

That is not how we approach it.

No investment manager can consistently predict short-term market movements. Instead, active management is about continually assessing risk, value and opportunity and having the flexibility to respond when circumstances change.

A passive investment generally follows an index regardless of the underlying valuation of the companies within it. As companies become larger, their weighting in many indices can also increase.

An active approach allows us to ask a differentset of questions:

• Is the price we are paying reasonable?
• Are the risks adequately reflected in that price?
• Are there better opportunities elsewhere?
• And, importantly, are we being adequately rewarded for the risk we are taking?

These are questions we believe become increasingly important when markets are expensive or uncertainty is elevated.

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From the United Advisory Investment Committee

The United Advisory Investment Committee continues to closely monitor developments across global markets and economies.

Our focus is not on reacting to every headline. Markets can move quickly in response to political events, economic data or changes in investor sentiment, and making investment decisions based purely on short-term news can often be counterproductive.

Instead, we concentrate on understanding whether those developments are changing the longer-term balance between risk and opportunity.

Across our Managed Accounts, this means continually reviewing asset allocation, investment managers, geographic and sector exposures, market valuations and the overall level of portfolio risk.

Where we believe risks are increasing and investors are not being adequately compensated for taking those risks, an active approach gives us the ability to reduce exposure.

Conversely, periods of uncertainty and volatility can create some of the best long-term investment opportunities.

When markets become unsettled, quality businesses and assets can sometimes be sold alongside everything else. Prices can move considerably faster than the underlying value of those investments.

That is when patience, discipline and the ability to act can become particularly valuable.

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Volatility Isn't Always the Enemy

It is natural for investors to become uncomfortable when markets are volatile.

However, volatility and risk are not necessarily the same thing.

A falling share price does not automatically mean a business has become a worse investment, just as a rising share price does not necessarily mean it has become a better one.

For a disciplined long-term investor, volatility can create opportunity.

The important distinction is between temporary changes in market prices and permanent losses of capital.

Our role is to continually assess that difference and determine where we believe capital is best allocated.

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Managing Risk While Looking for Opportunity

Our approach is therefore not simply about becoming more defensive when uncertainty increases.

It is about being selective.

There will be times when protecting capital and reducing particular risks is appropriate. There will also be times when market uncertainty presents opportunities to invest in quality assets at more attractive valuations.

Active management gives us the flexibility to do both.

Importantly, this is not about making dramatic changes to portfolios every time the economic outlook changes. Good investing requires patience, and sometimes the best decision is to do nothing.

But when the relationship between risk and potential return changes materially, we want to have the ability to respond.

That philosophy sits at the centre of the United Advisory Investment Committee's approach to our Managed Accounts.

Our objective remains straightforward: to protect and grow our clients' wealth over the long term, while ensuring the level of investment risk remains appropriate for their circumstances and objectives.

Markets will always move through periods ofoptimism, uncertainty and opportunity.

We cannot control those cycles.

What we can control is how we respond to them.

And in the investment environment we see today, we believe disciplined active management, thoughtful diversification and a strong focus on valuation and risk are more important than ever.