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.
A few minor changes this month. Our fundamental outlook on markets is unchanged, so the balance of our allocations remains largely the same.
Our preferences are unchanged. The global recovery story should mean that the Asian region and focused emerging markets perform well and we maintain healthy allocations here. It is still difficult not to view the US markets as extremely expensive as a whole, so we employ our themes for this exposure.
Enthusiasm has been growing for UK equities and there is value available here with us adding last month. Positions look about right given the relative appeal of some overseas markets, but if the news flow continues to improve then we may add to positions where appropriate.
Allocations to our preferred themes are maintained. It still looks as if we have a nice balance here – some areas of tech look vulnerable but our exposure is balanced well with other ideas such as healthcare and global insurance. We are switching to gold and precious metals equities (from physical gold) for some clients while more adventurous portfolios will see a broad mining and metals exposure introduced. Both of these changes may provide additional cover should inflation pick up.
As discussed earlier, we continue to monitor our Treasuries positions given movements in bond markets. Inflation could pose problems for fixed income later this year and we will ensure we review all the options in the space. However, we all expect short-term inflation (mid-year) given it is an annual read, and oil in particular hit multi-year lows at that stage in 2020.
Allocations remain unchanged – our diversification by sector should provide support.
We are reducing our uncorrelated assets exposure in lower risk portfolios to fund some of the purchases in other areas. That said, we are continuing to research interesting ideas in the space that we feel could offer a different dimension to portfolios.
Markets have enjoyed a good run and keeping dry powder back for any correction seems sensible for those portfolios where we have been running higher cash levels.
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.
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