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.
It feels as if sentiment has been fundamentally damaged with little in the way of a sustained rally after the October falls. Our cautious approach has been reinforced by recent events and we continue to tread carefully in these very unsettled markets.
Global equity markets are severely damaged and have not staged a meaningful rally in the last few weeks – cracks have even appeared in the previously invulnerable US. We are continuing to reduce our direct US equity (index) exposure in favour of our thematic approach.
The UK market is far from homogeneous. Whether large or small cap outperforms will be very dependent on the direction of sterling and the variation in sector returns has been extreme. While there are some interesting opportunities, we continue to run with low allocations for now.
We are taking the opportunity to add to healthcare allocations in some portfolios – the defensive nature of the theme looks particularly attractive at this time.
The weakening in appetite for risk assets has encouraged us to add to the US Treasuries positions, which we have been building in many portfolios.
Commercial property is being reduced in more defensive and cautious portfolios, given the size of the allocations, and the ongoing domestic economic uncertainty. We are still enthusiastic about the asset class in the medium term.
Our combination of absolute return, managed futures and structured products forms a crucial part of our cautious strategy across most portfolios. Gold has been helpful.
While we are cautious on markets, we still believe we can find alternatives to increasing cash allocations right now. Therefore, there are no changes here.
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.
