Omicron is causing major concerns for governments and societies but markets seem relatively relaxed so far. Our generally cautious view seems more than justified against this backdrop.
OVERSEAS EQUITIES
Persistent worries over China have led us to reduce exposure in some portfolios. We may yet see a swift recovery in the Chinese market, but the lack of transparency and the continuing risks mean that this looks, for now, more like an idea for adventurous investors. Otherwise, the global equities exposure remains unchanged.
UK EQUITIES
The UK is now facing a potentially very serious situation regarding Omicron and the economy is likely to be held back if further restrictions are introduced. Still, these problems are not unique to the domestic market and the current allocations look sensibly sized for all but the very worst of outcomes.
SPECIALIST
Given the uncertainties surrounding the direction of monetary policy and financial markets, our specialist allocations look like achieving a strong balance of growth and value ideas and access to areas which offer both protection and exciting growth prospects.
FIXED INCOME
It is only natural to be concerned about the fixed income space given the inflationary threat, but markets seem stable after the latest Federal Reserve announcement. This month sees us reducing our emerging market debt holdings for balanced investors with convertible bonds the beneficiaries.
PROPERTY
Property and infrastructure should both offer some security in a more inflationary environment, our allocations look sufficient.
ALTERNATIVE STRATEGIES
Allocations to alternative and protective strategies remain unchanged this month.
CASH
Slightly increased this month following the reduction in China exposure. We will look to reinvest the proceeds in the New Year.
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.
