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.
Though pleasing to see positive news in the markets, it seems like a lot is fully priced in now. Any negative newsflow on vaccines or infection rates is likely to bring a more challenging period for investors.
The US continues to set the tone for what happens in global markets. Much will depend on corporate earnings and news flow there, but some overseas markets will see their fortunes depend on their own progress with the virus. Investors need to be aware of the consequences of US-China relations deteriorating and of the data getting worse.
Domestically, the first (tentative) steps have been taken to reopen the economy and society, but progress is likely to be (rightly) slow. The economic data is truly awful, and the suggestions are that the EU-UK trade negotiations are likely to be painful. Ominously, the pound is coming back under pressure. Social distancing will be with us for months, and that in turn will surely preclude many industries from a full recovery until a vaccine is delivered. We do not hold much in UK equity and are not making changes for now.
The appeal of healthcare seems obvious in this environment and technology allocations have also started to show almost defensive characteristics at times. No changes here.
No changes here – the exposure is very diverse and we feel offers a balance of pure protection and some potential for returns in positive conditions.
We had seen some recovery here in line with other assets, but the potential severity of the UK recession means pricing is under pressure again, and we are reluctant to change holdings that are now priced at significant discounts to net asset values.
We are adjusting how we look at our allocations here into Cash Plus, Tactical Hedge and Uncorrelated Strategies. Our reasoning and current vehicles remain unchanged.
Cash is likely to prove its worth again in the short to medium term as markets seem to have come too far, too fast.
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.