A rather mixed week saw UK and European equities move higher, whilst US equities had another tough week. In fact, it was so tough that Bloomberg reported it as the worst start to April since 1929. Thank goodness past performance is not necessarily a guide to future performance. What is apparent, though, is that the Goldilocks period has passed and we are now in a later cycle phase where markets are likely to be buffeted by any bad news.
The other thing that stands out is the constant refrain that “the economic background remains strong.” It is a mellifluous line we have used ourselves. But it does now seem to be being used as the rock for investors to cling to as other news flows around them. Now we are not suggesting that the economic background is weak but we do think investors should consider what might happen if or when that perception of economic strength shifts. Amid rich valuations we would expect to see sentiment shift quite quickly.
Given this background, we are becoming a little more cautious. We intend to use periods of strength to reduce our overweight equity positions to a more neutral stance. This is emphatically not a reflection of any great panic and we are not exiting the equity markets. It is, however, a reflection of our responsibility to our clients to protect their wealth as well as to grow it. It also, perhaps, marks the beginning of a journey towards lower equity exposure in the months to come.
European Wealth is a trading style of European Investment Management Limited (registered number 06931664) which is incorporated and registered in England and Wales with registered office at Ellenborough House, Wellington Street, Cheltenham, Gloucestershire GL50 1YD and authorised and regulated by the Financial Conduct Authority (UK) and the Financial Services Board (South Africa). This message contains information that is confidential and privileged and it must not be distributed to any third party either whole or in part. If you are not the intended recipient, please advise the sender immediately and delete this message. This message is not to be construed as a solicitation or offer to buy or sell securities and does not in any way constitute investment advice, nor should it be used as the basis for any investment decision. The information contained in this message has been prepared using all reasonable care. However, it is not guaranteed as to its accuracy, and it is published solely for information purposes. Our opinions are subject to change without notice and we are not under any obligation to update or keep this information current.
The investments discussed in this message may not be suitable for all investors. European Wealth does not guarantee the performance of any investments. Past performance is not necessarily a guide to future performance. The value of investments may go up or down and you may not get back the amount you have invested. The income from an investment is not fixed and may fluctuate. The value of an investment involving exposure to foreign currencies can be affected by exchange rate movements which may cause the value of the investment to go up or down. European Wealth and/or its affiliated companies and/or their employees may, from time to time, hold shares or holdings in the securities discussed in this message and may as agent buy or sell those securities.
This document is not, and under no circumstances is to be construed as, an advertisement, or any other step in furtherance of a public offering of shares in the United States or Canada. This document is not aimed at persons who are resident in the United States, Canada or any province or territory thereof.