Investment Line is a regular investment bulletin produced by Mattioli Woods plc. The communication provides an update on funds, highlights some of the areas we are currently focusing on, and our thoughts on the issues of the day.
This month sees us maintain our cautious positioning in a world of heightened uncertainty whilst continuing to add to niche, specialist investment areas.
The US market may continue its strong run in the first few months of the Trump administration, but for us, valuations are not reflecting the risks involved. Our major move in overseas equities was the removal of European exposure in November – we hold Asia for now though increased protectionism is a worry there.
It looks increasingly likely that we are facing ‘hard Brexit’, and ongoing currency weakness may indeed help the FTSE 100 overseas earners. Though robust for now, the domestic economy may be in for a difficult period, and we maintain our very low allocation to UK equities.
We are adding non-life insurance in our ongoing search for niche opportunities that can add diversification and enhance returns without being dependent on the continuation of the current market euphoria.
The well-rehearsed arguments against the space are more relevant than ever given the ‘reflationary’ narrative. Some areas remain very vulnerable – exposure remains select and low.
We are holding overall allocations for now, continuing to focus exposure on closed-ended funds and regional property, expecting the income to be most of our return in 2017.
Absolute return funds offer a variety of strategies to maximise risk-adjusted returns and perform a useful role in portfolios; disappointing recent performance from some strategies leads us to trim positions to help fund our new non-life insurance exposure.
Cash is retained at the levels held previously.
Investment Line is written and edited by members of the Mattioli Woods Group Investment Committee, and is for information purposes only. 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.
Mattioli Woods plc is authorised and regulated by the Financial Conduct Authority.