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.
Chasing the recent rally looks unwise given the uncertainties that prevail. We remain highly selective and opportunistic.
US equity markets have rallied impressively of late as the AI story has been absorbed by the market, but Japanese equities have also surprised some with their strong showing and we are adding in adventurous portfolios. China continues to be a disappointment, and equities in general merit a degree of caution at the current time.
It feels as if the storm clouds are gathering for the UK consumer as inflation remains a problem and the mortgage market faces serious challenges. We have maintained positions over recent times but have to accept that the domestic economy could be in for a tough time and those companies most exposed will suffer further.
Our thematic allocations look credible given the economic backdrop and our views. Global equity (with a focus on income) is added to again, to bolster the defensiveness of some of the equity offering.
Rates may yet rise further but the opportunities here look very appealing on a medium-term view. We are adding some emerging market debt to our exposure in this area.
Property positions are held again, though the possibility of significant further rate hikes from the Bank of England poses a major headwind. Valuations are undemanding as a result and for those who are selective and patient, long-term opportunities can be found.
We have a small range of options we like, which bring an extra dimension to portfolios. The environment has posed challenges even for ideas in this space.
Cash levels are unchanged – returns are now decent here and the appeal of dry powder is significant.
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Investment Line is written and edited by Chief Investment Officer Simon Gibson and Investment Strategist Richard Smith 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.