Coming back from an all-inclusive holiday, I couldn’t help but recall how easy life had felt. No cooking. No cleaning. No thinking. Everything taken care of. And it was in that moment of not thinking that I actually did my best thinking.

Contrast that with September. For many, it’s back to school, back to work, and – in the UK at least – back to darker mornings, colder evenings and greyer skies. It’s no wonder our moods take a hit. And if moods can move markets, perhaps it shouldn’t surprise us that September has historically been the weakest month for equities.

The ‘September effect’

Over the past 45 years, September is the only month when the US S&P 500 index has averaged a negative return.

In the last decade, six Septembers have ended in the red.

The pattern isn’t just US-centric: the UK, Canada and Hong Kong have all shown similar September declines.

Why does it happen? Theories abound:

- Institutional investors rebalancing portfolios after the summer lull, which can lead to selling pressure.
- US fund managers tidying portfolios before fiscal year-end (the US government’s fiscal year ends on 30th September).
- US investors selling losers early to trim tax bills.
- Post-holiday blues and reduced daylight dampening sentiment.
- Even IPO seasonality, as bankers launch stock market flotations. This can dilute demand for existing stocks, putting downward pressure on prices.

Whatever the cause, it highlights how human behaviour, moods, habits and even the calendar can have a real, if short-lived, impact on markets.

Key takeaway

Which brings me back to that holiday thought. Multi-asset investing is a bit like an all-inclusive package. All the heavy lifting – portfolio construction, asset allocation and manager selection – is taken care of for you. You could call it all-inclusive investing. And like any good all-inclusive, it’s only once you’ve experienced the benefits that you realise how worthwhile that single, all-in service really is.

While September may be the market’s toughest month, a diversified, multi-asset approach means you don’t have to spend your time worrying about whether this September will live up to its reputation. A team of professionals are already giving that a lot of thought. They’re ready to act to manage risks or seize opportunities on behalf of you and your clients. As the evenings grow darker, that should help to lighten your mood.

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This article is provided for general information purposes only and should not be construed as personal financial advice to invest in any fund or product. These are the investment manager’s views at the time of writing and should not be construed as investment advice. The opinions expressed are correct at time of writing and may be subject to change. Capital is at risk. The value and income from investments can go down as well as up and are not guaranteed. An investor may get back significantly less than they invest. Past performance is not a reliable indicator of current or future performance and should not be the sole factor considered when selecting funds.