Join us in a look back at a surprising year that saw a meeting at Handforth Parish Council going viral, a ‘pingdemic’ and lots of lateral flow testing. 2021 also brought a renewed focus on climate change and sustainability.


  • Portfolio performance – a positive year for our portfolios, notably the sustainable models.
  • Financial review – a whistle-stop tour around the world, from financial recovery and market highs to struggling Chinese equities.
  • Inflation – what is causing the rise in inflation rates?
  • Progression of COVID – from Delta to Omicron.
  • Sustainability – the key outcomes of a critical UN climate change conference.

Portfolio performance

At Holden & Partners, we were pleased with our performance over 2021. Our models performed well against their respective Investment Association benchmarks,1 and the sustainable models outperformed their conventional peers in most cases. Our UK equity funds performed strongly, namely Royal London Sustainable Leaders and ASI UK Smaller Companies. TR Property also posted strong returns, benefiting from their positioning in industrial and logistical sectors.

The final quarter of 2021 also marked the one-year anniversary of our Managed Portfolio Service strategies, which came with positive performance figures. New additions to the portfolio such as Ninety-One Global Environment and UBAM Positive Impact Emerging Equity performed strongly, with the added benefit of investing in companies that contribute to decarbonisation. Long-term favourite, Stewart Investors Asia Pacific Leaders, fared well despite challenges in the region, thanks to a relatively low emphasis on Chinese equities.

Financial review

Equity markets in the UK – another rewarding year

Diversified equity market investors saw strong earnings growth again, with less volatility than 2020. Surprisingly, despite experiencing the worst recession since World War Two, the global equity markets (on aggregate) have not posted negative returns since 2018. It indicates the profound impact of the monetary and fiscal supports deployed. However, although UK equities had their best year since Brexit, they still lagged most European peers.

US stock market highs

Strong economic data and corporate earnings led to the main US stock market index, the S&P500 reaching all-time highs last year, finishing 2021 with a return of 28.7%.2 However, a narrow range of companies fuelled that strong index return, with Goldman Sachs reporting that just five stocks; Microsoft, Google, Apple, Nvidia and Tesla, accounted for more than a third of the S&P 500’s yearly return to the month of December.3

A difficult year for Chinese equities

In a year where the rising tide of the global recovery lifted most ships, Chinese equities were a notable exception. Strict regulatory actions in technology and education sectors, power shortages and a major developer, Evergrande, defaulting on its debt all combined to result in Chinese equities dragging both the MSCI Emerging Market and MSCI Asia ex-Japan Indexes into negative territory.4


To diversify from equity risk, alternative investments focused on broad commodities and real estate. Broad commodity indices thrived in 2021, as demand for industrial metals, crude oil and natural gas led to supply shortages and rampant prices. Real estate investment trusts (on aggregate) tipped major equity indexes, supported by strengthening global economies and offering strong and stable yields.


The latest figure from the Office for National Statistics states that inflation5 rose by 4.6% in the 12 months to November 2021, up from 3.8% in the 12 months to October 2021.6 Several factors have contributed to the rise of inflation over the year, particularly:

  • Shifting consumer demands

As the economy reopened in April 2021 after lockdown, people spent pent up savings, which contributed to price rises of certain goods including food, clothing and household items.

  • Transport

The price of motor fuels increased in the last six months, with average petrol prices at 145.8 pence per litre in November 2021 (the highest record), compared with 112.6 pence per litre a year earlier.7 A surge in demand led to many petrol stations running dry across the country. Additionally, semiconductor supply shortages affected the production of new cars, increasing the demand for second-hand cars.

  • Household services

Rising gas and electricity prices were passed on to consumers after Ofgem raised the cap on energy prices to reflect the increased costs of supplying. This was caused by reasons including low levels of stored energy from last year, increased demand from Asia and fragile global supply networks.8 It was the largest contribution to inflation from this division since 2009.9

  • The Bank Rate

In March 2020, the Bank Rate was lowered from 0.75% to 0.1%, the lowest it’s ever been in UK history.10 Only in December 2021 was it increased to 0.25%, to return CPI inflation sustainably to the 2% target.11

For more on inflation, please refer to our earlier article – here.

Progression of COVID

The push to get the population vaccinated was top of the global agenda. By July, 50% of the UK population were fully vaccinated as the Delta variant reached headlines.12 However, despite this variant causing a small spike in reported cases, the UK continued as ‘normal’.

Next, the Omicron variant, first identified in South Africa, spread rapidly. Despite UK cases hitting record daily highs of over 150,000 by the end of December,13 this variant was believed to cause milder symptoms. The UK government administrated a rapid vaccination booster roll out, and hospitalisation rates continue to be monitored closely.14


Last year, saw an unparalleled number of climate events and anomalies.15 From record-breaking temperatures across Europe,16 to terrifying wildfires, flooding and tornadoes, the impact of climate change has never been more evident.
Therefore, COP26, the 26th UN climate change conference in Glasgow, was arguably the most important to date.

Significant outcomes include:

  • An agreement to reduce coal use, although a last-minute change of wording diluted the pledge from “phase out” to “phase down.” 17
  • Rules around carbon trading were tightened to avoid ‘double-counting’.18
  • The US and China agreed to co-operate on climate issues overcoming previous diplomatic impasses.19
  • Over 100 countries pledged to reduce methane emission levels by 30% by 2030 – excluding Russia and China. 20

If the COP26 pledges are met in full, the world’s rising temperature could be kept within 1.8C, according to the International Energy Agency.21

Although this is still above the 1.5C target set in the Paris Agreement, it is a much-needed improvement on the current 2.7C trajectory.22

We’re looking positively to the future, with the hope that 2022 will bring climate action, good health and sustainable progress.

We have received lots of positive feedback about our updates. If you’ve found them useful and informative, we would be delighted for you to share them with friends, family and work colleagues. We are always keen to spread the word about our unique approach to financial planning and investing.

Please note that any thresholds, allowances, percentage rates and tax legislation stated may change in the future. The content of this communication is for your general information and use only; it is not intended to address your particular requirements. This communication should not be deemed to be, or constitute, advice. You should not take any action without having spoken with your usual adviser.

1 (in the Mixed asset section).

2 Calculated using Morningstar; S&P 500 TR USD 01/01/2021 – 31/12/2021.


4 China the key reason emerging market equities missed out on 2021 global rally | South China Morning Post (

5 Inflation as measured by the Consumer Prices Index including owner occupiers’ housing costs (CPIH). CPIH is the most comprehensive measure of inflation. It extends CPI to include a measure of the costs associated with owning, maintaining and living in one’s own home, known as owner occupiers’ housing costs (OOH), along with council tax.


7 UK inflation jumps to 10-year high as petrol prices soar | Inflation | The Guardian


9 Consumer price inflation, UK – Office for National Statistics





14 UK Summary | Coronavirus (COVID-19) in the UK (









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