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.
Though we made no changes last month, our long-standing cautious approach appears vindicated in light of the market falls this week.
Significant falls across global equity markets demonstrate the difficulties in achieving diversification by region. Our low exposure to the US finally looks like it is being rewarded. Our Asian exposure has been impacted, but the long-term investment case remains intact.
The newsflow fails to improve and the possibility of earlier-than-expected rate rises is reason for extra caution on the domestic market.
It has been encouraging to see our specialist equity allocations hold up well in the equity market sell-off. The defensive nature of these positions has meant they have reacted less dramatically to the uptick in volatility.
The increase in yields will ultimately undermine bond markets but the short-term ‘flight to safety’ appeal has provided some support. We continue to favour niche positions in fixed income.
We have recently trimmed property allocations, but our still-significant exposure has held up well relative to the wider equity space.
The range of strategies we employ here has been helpful in providing us with protection against the sell-off in risk assets.
We continue to hold some cash for opportunities that may emerge, but the asset class in itself remains deeply unattractive. Where we have held more in defensive and cautious portfolios has clearly been helpful of late.
Investment Line is written and edited by members of the Mattioli Woods Asset Allocation Team, 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 fall as well as rise, and investors may not get back the full amount invested. Past performance is not a guide to the future.
Mattioli Woods plc is authorised and regulated by the Financial Conduct Authority.
