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 seem to have run out of steam as the challenges of 2023 move to the front of investors’ minds. We approach the new year with optimism without losing our focus and discipline.
We discuss the regional balance of our equity allocations on an ongoing basis, but this is unchanged again this month. The US will hopefully offer up some opportunities after what may prove to be a difficult first half of 2023 on the earnings front and other areas continue to present interesting questions for investors - not least Japan, with the recent news on yield curve control and the strengthening of its currency. China is re-opening but will Covid-19 further disrupt these efforts and will any uptick in the economy add to the inflation problem elsewhere?
Sterling may continue to strengthen against the dollar next year, which could help small and mid-cap UK equities, but the domestic economic environment remains challenged.
Our thematic focus has been mostly rewarding – the more defensive areas of global insurance and healthcare have been helpful on a relative basis this year.
Our growing conviction that there is genuine value in areas of the fixed income market sees us increase allocations to investment grade corporate bonds in some portfolios.
Exposure here does of course mean more vulnerability to a faltering UK economy but the allocations are diverse and position sizes are sensible given the risk-reward outlook.
Few strategies meet our criteria here, but we will continue to look for options which can bring something different to client portfolios.
Slightly reduced to add to fixed income in some portfolios but we remain comfortable with higher allocations, waiting for some better opportunities.
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.