Investment Line is a regular bulletin produced by Mattioli Woods plc to provide an update on portfolios, a highlight of areas we are focusing on, and our thoughts on issues of the day.
Our cautious approach seems more appropriate than ever as market sentiment appears to have shifted.
We maintain overseas equity allocations for now, staying focused on the same long-term growth stories and aware of the traps posed by both US and European equities.
Sterling has enjoyed a strong run, suggesting there are those who believe in the UK economic story, but this optimism seems to us to be misplaced. The issue of the customs union remains unsettled (with major implications for the Conservatives’ relationship with the DUP) and the economic headwinds are real. We believe that UK political risk is the highest element of risk applying to portfolios at present.
No changes following the addition of technology to portfolios last month.
Even sovereign debt may look attractive at some point if yields continue to rise, but for now we see capital losses as a real threat to many parts of this asset class.
As discussed overleaf, we are slightly reducing (overweight) allocations to reflect our views on the UK economy and tougher times ahead, though we still like the asset class.
This is an excellent time to add to the existing holdings in our Structured Products Fund given the return profile and the pricing impact of recent volatility.
Cash levels remain unchanged this month. Recognising the lack of ‘return’ from this asset, we nevertheless feel that a ‘no loss’ asset, in capital terms, has some value.
Investment Line is written and edited by members of the Mattioli Woods Asset Allocation Team, 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 fall as well as rise, and investors may not get back the full amount invested. Past performance is not a guide to the future.
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