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.

5 minutes

We live in confusing times. Central banks engage in obfuscation, propaganda continues to be deployed by the US and Russia, and the US election campaign has achieved a level of extreme farce. Even aside from the “outlier” geopolitical events (about which we can all overly obsess), it really can be difficult to know what to believe. Politicians and central bankers are compromised by their public roles – establishing facts over Brexit and the underlying state of the economy can be difficult. When one considers that a large part of policy since the financial crisis has been geared towards creating a wealth effect via robust asset markets, one is right to be suspicious about the real “state of affairs”. What can be said with some confidence is that we are in a low growth world with elevated asset prices and monetary policy at its limits. In the face of markets which continue to confound expectations and tempt investors to take more risk for any return, it feels sensible to retain a cautious outlook and look again at so-called alternatives.


After the panic induced by the outcome of the Referendum, the commercial property arena has regained some composure. Several of the open-ended funds have announced that they will be re-opening, and the investment trusts which were battered in the aftermath of the vote have recovered significantly. This all comes as something of a relief, especially since we have held significant positions in the asset class. Not everyone thinks we are entirely “out of the woods” however, and Brexit uncertainties remain. The experience of seeing funds suspended and continuing Brexit fears does mean that we are reviewing our open-ended fund exposure. Our own (Custodian) REIT has weathered the developments particularly well and given the regional focus which we prefer, looks to be in something of a sweet spot in a world of low yields.


The extraordinary personal attacks which have come to characterise the race for the Presidency have been rather depressing. Clinton would now look to be in a better position than she was, but with a month to go to the vote anything could happen. Making bets on binary outcomes is always a risky investment strategy, but in this situation it would be difficult to know what concrete measures to take even if one knew the outcome in advance! Overall, the market seems to expect and to prefer a Clinton victory, but some of the pro-market policies of Trump could easily trigger a bullish reaction from markets should he be elected. Clinton would seem to represent less of a disruption to the status quo, but her hawkish foreign policy record amidst rising tensions with Russia could also unsettle markets. Another reason to be cautious…


The Private Equity sector has seen a flurry of excitement following HarbourVest’s bid for SVG Capital. The initial offer was rejected and Goldman Sachs has since come up with an offer as part of a consortium with the Canadian Pension Plan Investment Board. HarbourVest has constructed a proposal which would see a still higher return to SVG investors. In short, a bidding war has broken out. Our investment case has never depended upon takeover activity, but given some of the unrealised value we have identified, it is likely we will see more bids. The case for Private Equity remains robust; in a world of limited growth, companies which can undergo positive transformational change will likely remain attractive.


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.

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