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.
We are not making any asset allocation changes this month. We are extra vigilant given the forthcoming US debt ceiling negotiations and the events surrounding North Korea.
Most areas look expensive and our preferred regions remain the same. The US risk/reward ratio looks absurd and despite recent geopolitical developments, parts of Asia look significantly more attractive.
Still difficult to unearth any grounds for optimism on the Brexit negotiations, and the UK economy faces significant challenges ahead. Preference remains for smaller companies.
Our lack of belief in the case for global growth means portfolios heavily feature specialist allocations where we feel companies can benefit from key themes in the investment universe and are likely to grow irrespective of wider macro-economic developments. Current allocations are working well.
A global regime of higher interest rates is not a done deal, but we have subjected investment grade bonds to additional scrutiny given their interest rate sensitivity.
We are holding overall allocations for now, continuing to focus exposure on closed-ended funds and regional property, expecting the income to be most of our return in 2017.
Our absolute return allocations are a reflection of poor returns on cash and high valuations in conventional investment areas. The allocations will be used selectively as and when we see compelling opportunities, though nothing falls into this category at the moment.
Cash is retained at the levels held previously.
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.