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.
Equity markets have been surprisingly strong over recent weeks but the challenges ahead are very real – our positioning is largely unchanged.
Direct exposure to China is being removed from Adventurous portfolios following our moves elsewhere. The market may look cheap in some areas, but the political risk has reached a sufficiently elevated level for us to be compelled to look for opportunities in other areas.
The UK offers opportunities but those areas of the market more exposed to the fortunes of the UK economy itself may show vulnerability. Inflation has, as elsewhere, become established and the strain on the cost of living from energy and food prices is significant. Still, the value elements of the market offer some reassurance as rates rise.
We have looked closely at the energy sector over recent months and have now decided to add an exposure for adventurous investors. Crucially this is focused on the opportunity presented by oil producers and explorers as opposed to taking a position on the oil price directly.
Recent falls here have been far from encouraging. The US Federal Reserve is adopting a more hawkish tone and the bond market is showing its obvious weaknesses. Still, more difficult times ahead may of course rejuvenate the investment case for Treasuries and some opportunity also remains in the wider fixed income space.
Property has been very helpful of late, and REITs usually hold up well in stagflationary environments, making our current exposure look sensible.
Those vehicles which meet our requirements are likely to be able to make a contribution in markets beset with uncertainty and increased volatility, but in truth there are not that many which are suitable. Allocations remain focused and tailored to client risk appetite.
Cash is being maintained at current levels. Ideally, we remain as fully invested as possible but in a difficult environment keeping dry powder may bring its rewards.
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.