No changes to positioning this month – our cautious take on markets looks more than justified at present.
OVERSEAS EQUITIES
The blend of geographies looks sensible – China continues to have difficulties and we have already exited positions there. As flagged overleaf, some of our conviction in Japan is perhaps wavering though we are making no changes yet. Riskier geographies continue to look challenged in this environment.
UK EQUITIES
Very little has changed here. Political pressure seems to have come back on the Government though the market is unlikely to be affected. Households face severe headwinds and portfolios will be positioned with the weakness of the domestic consumer in mind.
SPECIALIST
Having added energy exposure last month we have a strong range of thematic ideas to supplement our geographical equity exposures.
FIXED INCOME
Difficult to make the argument for most of fixed income – there is some diversification element and some would argue that rate rises are being priced in but it feels as if the downward momentum could continue. Allocations are small and very focused.
PROPERTY
Property has been very helpful of late, and Real Estate Investment Trusts (REITs) usually hold up well in stagflationary environments, making our current exposure look sensible, given that possibility.
ALTERNATIVE STRATEGIES
Those vehicles which meet our requirements are likely to be able to make a contribution in markets beset with uncertainty and increased volatility, but in truth there are not that many which are suitable. Allocations remain focused and tailored to client risk appetite.
CASH
No change to cash – clearly inflation is unkind to the asset class – but we retain flexibility to take advantage of opportunities as they arise, and inflation may yet be less of a hit to real values than market prices would be if invested elsewhere.
Investment Line is written and edited by members of the Mattioli Woods Group investment committee 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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