We are maintaining our key macroeconomic outlook this month. Recent newsflow and data suggest portfolios are sensibly positioned.
OVERSEAS EQUITIES
China looks to be in a truly dreadful state and global growth is under significant pressure. The US continues to defy some of the more pessimistic projections, but the lagged effects of rate rises should not be underestimated, with most yet to be seen.
UK EQUITIES
The Bank of England continues to face a headache from robust wage growth and core inflation. Valuations do look very depressed, and we are seriously considering higher allocation. We are not adding just yet though, as the catalyst for a re-rating of UK equities is not yet in sharp focus.
SPECIALIST
The thematic allocations make sense against the global backdrop. Global equity income should add to the resilience of the equity allocations and the themes generally provide a considered way of gaining access to US equities but in a more focused and risk averse manner.
FIXED INCOME
After recent additions, there are enough uncertainties around the global bond space for us to hold off increasing allocations for now.
PROPERTY
No changes this month – the holdings move around as inflation and rate expectations wax and wane. The catalyst may be some way off, but valuations justify retaining positions.
ALTERNATIVE STRATEGIES
We have a small range of options we like, which bring an extra dimension to portfolios. The environment has posed challenges even for ideas in this space.
CASH
Current allocations look sensible given the opportunities elsewhere, and that we are being paid for the discipline of holding some cash.
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Investment Line is written and edited by Chief Investment Officer Simon Gibson and Investment Strategist Richard Smith and is for information purposes. It is not intended to be an invitation to buy, or act upon the comments made, and all/any investment decisions should be taken with advice, given appropriate knowledge of the investor’s circumstances. The value of investments and the income from them can go down as well as up, and you may not get back the amount invested. Past performance is not a guide to future returns.
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