No change in positioning this month – our cautious approach to the markets seems more than warranted at this time.
The mix of geographies seems sensible – China continues to struggle and we have already exited positions there. As noted on the back, some of our belief in Japan may be wavering although we are not yet making any changes. Riskier geographies continue to look challenged in this environment.
UNITED KINGDOM EQUITIES
Very little has changed here. Political pressure seems to have returned to the government although the market should not be affected. Households are facing severe headwinds and portfolios will be positioned taking into account domestic consumer weakness.
After adding energy exposure last month, we have a wide range of thematic ideas to complement our geographic equity exposures.
Hard to make the case for most fixed income – there is an element of diversification and some would say rate hikes are factored in, but it looks like the downward momentum could continue. The allocations are small and very targeted.
Real estate has been very helpful lately, and real estate investment trusts (REITs) generally hold up well in stagflationary environments, making our current exposure reasonable, given this possibility.
Vehicles that meet our requirements are likely to be able to make a contribution in markets plagued by uncertainty and heightened volatility, but in truth, not many are suitable. Allocations remain targeted and tailored to clients’ risk appetite.
No change to cash – clearly inflation is not favorable to the asset class – but we retain the flexibility to take advantage of opportunities as they arise, and inflation could affect even less real values than market prices if they were invested elsewhere.
Mattioli Woods plc published this content on April 21, 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unmodified, on Apr 21, 2022 1:04:08 PM UTC.