The market outlook remains challenged. We continue to upgrade the quality of our equity exposure and to selectively add to fixed income.
OVERSEAS EQUITIES
Headwinds remain for markets and being invested in the right sectors and themes is likely to be a performance differentiator. We are reducing our exposure to India in some portfolios given the extreme valuations relative to other areas and the prospect of a global slowdown.
UK EQUITIES
The UK shares many of the same issues as elsewhere and more rate rises may be needed to bring inflation down further. A downturn here would put pressure on domestically-focused stocks but the valuations there are relatively undemanding. Larger, multinational names look like decent places to take cover if markets deteriorate.
SPECIALIST
This month sees us continue to add to some of our holdings in global equity income as we add more protective equity names to portfolios.
FIXED INCOME
Some modest additions to portfolios, including in higher-risk portfolios. Gilts are looking more interesting but we stick with US Treasuries and quality investment grade for now.
PROPERTY
The temptation to bracket all property sub sectors together is unhelpful as there are niche opportunities here and resilient areas among the more vulnerable. Still, we would not yet look to add, even at these lower valuations, as the possibility of interest rates remaining at elevated levels poses challenges for some business models in the asset class.
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
A slight reduction in some cash positions as we move to add to fixed income this month.
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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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