No changes this month with our outlook remaining unchanged. We believe the portoflios are sensibly positioned for the challenges to come in 2024.
OVERSEAS EQUITIES
The US continues to look expensive and the new found optimism makes us cautious here. Elsewhere, valuations don’t look too bad. Small caps are trading at very extreme discounts to larger names but it may be that they are simply pricing in the true prospects for an economic downturn and reflecting greater rate sensitivity.
UK EQUITIES
The latest economic growth data is not that inspiring and next year is unlikely to be easy for the domestic economy. A lot will depend on whether the Bank of England can cut rates given our historic tendency for higher inflation than peers.
SPECIALIST
In a world where we do not think (most) equity valuations reflect the challenges ahead, we continue to employ a strategy of using themes to allow us to access those sectors and ideas we find most appealing. The recent addition of energy looks like a sound long-term bet, though economic weakness could weigh on it in the short run.
FIXED INCOME
Government bonds look an attractive way of playing the likelihood of rate cuts. Here too though, it is important to proceed with caution as rates for longer-dated bonds may be determined more by the debt problems affecting economies.
PROPERTY
Property has rallied and shown its recovery potential for when interest rates begin to fall. We hold positions and are being well paid to do so via yields.
ALTERNATIVE STRATEGIES
We have a small range of options we like, which bring an extra dimension to portfolios. As such, they are potentially useful differentiators for next year.
CASH
Cash is unchanged this month.
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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.
All content correct at time of writing.
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