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 focusing on, and shares our thoughts on the issues of the day.
Markets have remained under pressure and falls in most asset prices indicate an atmosphere of fear amongst investors. We are making changes to some portfolios; the possibility of more volatility (and potentially finding ourselves the wrong side of that if sentiment turns positive) means that the already low equity exposure is unchanged.
Wherever you look, the coronavirus-induced equity market falls have been swift and brutal. Even the US has succumbed to the pressure, but markets like Japan and Europe have been exceptionally weak. We have not changed the balance of equities across the geographical regions. There will be value being created by these prices, and we remain vigilant.
The UK has not escaped equity market falls and having a leading index heavy in energy and financials has been especially unhelpful of late. Allocations remain low.
Even these niche areas of the market have been affected by this dramatic sell-off, but longer term we think themes such as infrastructure, healthcare, global insurance and technology will all be winners.
Action was needed here as areas of the credit market remain acutely vulnerable to a slowdown in the economy. We have removed/reduced high yield bonds and reduced other corporate fixed income in portfolios at the lower to medium risk levels.
The volatility in markets has infected commercial property and fears of a recession have seen REITS badly hit. The falls do seem overdone here, probably exacerbated by liquidity, and we are maintaining positions.
A wide range of investment strategies continue to be employed to help navigate these challenging markets. Some have regained credibility but have still been hit.
Cash suddenly looks very attractive and the actions of investors globally are an indication that in stressed times it might be the only asset that can be trusted in the short term.
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.
Mattioli Woods plc is authorised and regulated by the Financial Conduct Authority.
