Our Investment Update

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.

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Risk Warnings

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.

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