Our Investment Update

Gosh. Are we still here?  Clearly nuclear Armageddon did not take place.  The crisis in the Korean peninsular rumbles on but markets – so far at least – have remained sanguine.  As one writer put it, “How do you price extinction?”  Equities pulled back a bit last week in many cases.  A couple of percentage points does not equate to a ‘risk off’ crash but it does blow some of the froth off what were feeling like rather stretched valuations.

The underlying macro data remains largely positive. This morning saw Japanese growth beat expectations – only for equity prices to fall as the yen strengthened.  No pleasing some people.  The minutes of the US Federal Open Markets Committee which sets US interest rates are due this week.  Rather like the non farm payroll data these seem to be an almost irresistible source of fascination to some as they pour over them trying to discern the Committee’s next move.  Or lack of it.  Frankly, it’s a bit like rummaging around in the shrubbery looking for a lost cricket ball.  Possibly interesting – but unlikely to be wildly illuminating.

We are still cautious – not just because of madmen with bombs but recognising that there are other potential triggers for the run in equities to reverse in the short term. Cautious, but not pessimistic – and such a pull back would be seen by us as an opportunity to put money into the markets.

Regulatory Notice

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. 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.

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.

Restricted Investors

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.

Our Investment Update

Equity markets continued to move higher last week, with European and UK equities doing notably well-  albeit hardly a vertiginous climb.  Once again, the driving force seems to be the ongoing flow of good macro data.  This included solid GDP numbers in the Euro area and an increase in the US non farm payrolls.  This latter data gets picked apart like a chicken’s entrails in the search for an insight into the Federal Reserve’s next move.  It is hard to see whether this is really worth the effort.

In terms of central banks, the sense was that previous ‘hawkish’ comments had given way to a more ‘dovish’ stance.  Or, in other words, the waffle continues.  The UK is a good example of this.  Apparently household debt, which used to pose a threat to the economy, is now not such a big deal according the Governor of the Bank of England.  At Société Générale, Albert Edwards clearly disagrees seeing “slumping household saving ratios in both the US and UK” as an “impending disaster.”  In our view, it is an additional factor to consider amid fragile UK consumer sentiment.

The low level of volatility is also in our thoughts.  We have always held the view that volatility simply tells you what has happened and that it is a very poor indicator of future expectations.  That said, we have also written before about asset valuations being high.  Combing the two leads us the view that pricing models that use historical volatility as an input, such as those used in high yield debt markets, may well be mispricing assets.  And our fixed income team reiterates their view that sovereign debt, the ‘risk free’ indicator, is mispriced too.  So our dim view of bonds continues – stay short duration and stick to quality.

So, little has changed since last week.  Our view remains exactly the same – optimistic for economic growth and equity markets in the medium term but wary of a pull back in the short term.  New money going into the market should follow the highest conviction opportunities – such as Asia, emerging markets and Europe.  For those invested, check your positions – do you need to rebalance?  Risk management is vital and preventing excessive positions building up is at the heart of this.

Regulatory Notice

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.  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.

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.

Restricted Investors

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.

Our Investment Update

Despite US equities hitting more record highs, overall global equities were flat last week.  The big mover was oil, which reacted strongly to news that Saudi Arabia and Russia would cut production.  Volatility remained very low and the summer holiday mood seems to be prevalent.

That summer holiday mood can also be seen in the media.  Dramatic headlines saying that consumer debt is going to destroy the economy may sell newspapers but is it actually a reality?  It is an interesting question.  The easy answer would be to dismiss it out of hand.  But sentiment does matter and if it gets rocked and consumers stop spending then it is going to have an effect on the economy.  There is, of course, the risk of a cycle of economic weakness undermining sentiment etc. etc.  This uncertainty is precisely the reason we took profits on our UK equity positions and brought them back to neutral.

We have been wary of an equity market pull back for sometime and it has not happened.  Nonetheless, we remain of the view that this period of low volatility will come to an end and that more exciting times lie ahead.  Why describe them as exciting?  For the simple reason that whilst there is the possibility of a pull back, volatility works in two directions  and there is also the chance of a sharp upward move.  After all, not all surprises have to be unpleasant.

So is our big news that the market could go up or down?  No, the point is that we remain optimistic in the medium term but that risk management is all important.  And that does not mean de-risking and pulling out of equities.

Regulatory Notice

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.  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.

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.

Restricted Investors

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.

Our Investment Update

Once again, US equities continued their rise, as the US business cycle closes in on its ninth year.  European equities, though, slipped back – apparently the result of a stronger euro but, in our view, perhaps just a reasonable pause for breath after recent strength.  Oil was weaker again – and dragged down pretty much everything associated with it.

The yields on global sovereign debt were broadly lower.  We remain bearish on bonds.  Very bearish.  At these levels, real yields simply do not offer enough to justify the risks of holding them.  Both volatility and liquidity are low and, in our view, this magnifies the potential for a nasty shock.  This is why we remain focussed on high quality, short duration positions where we see the return of capital as more important than return on capital.

As we said last week, we remain positive for the outlook for equities in the medium term.  Despite the recent comments from the International Monetary Fund that US and UK growth may be lower than previously expected, overall global growth still seems likely to continue.  Whilst it does, the opportunities for corporate profits growth remain.

In a mature cycle with most equity valuations at elevated levels, the balance of risk and return needs to be carefully weighed up.  For those already invested, a reality check on weightings and exposures is prudent – and rebalance as appropriate.  For new money, though, things are trickier.  Do you invest now with the risk of a pull back?  Or hold off and risk markets drifting higher?  Our view is that timing markets to that degree is simply not possible and so, if you are going to commit to risk assets, do so progressively and take no more risk than you can afford.

Regulatory Notice

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.  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.

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.

Restricted Investors

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.

Our Investment Update

Last week proved to be another good one for the US, with the S&P 500 Index continuing its seemingly inexorable rise.  Most of the attention was on comments from Fed Chair Janet Yellen about inflation and rates.  Despite the US CPI number coming in lower than expected, it is clear the Fed will tighten if inflation trends higher.  Just about the least surprising piece of news for some time.  In the background we noted that US retail sales and consumer sentiment slipped back.  This is something we will be keeping an eye on given our positioning and its bias towards the US consumer.

Things were quieter this side of the pond with most European markets flat.  Industrial production numbers were strong again – unsurprisingly led by Germany.  This reinforces the sense that, despite all of its political problems, Europe’s economic expansion is continuing.  Here, our positioning is remains biased towards the larger northern economies for the time being.

And so to the UK.  Here we remain somewhat uncertain.  There seem to be two extreme scenarios – one of increasing economic growth and the other of recession sparked by a collapse in consumer spending.  Frankly, we do not have a strong conviction for either of these.  Our view, for some time, has been that the domestic economy is in good shape.  Equally, we would not dispute the risks of a slowdown amid the endless rows over Europe.  It is this uncertainty that has led us to move back to a neutral position.  It allows us to bank the profits made from moving overweight after the Brexit vote.  But it does not reflect a sense of panic over the outlook – simply the prudence of not being over exposed amid uncertainty and we have used the proceeds to back our conviction positions in Europe and the frontier markets.

Whilst we have de-risked over the last few months, we remain unashamedly ‘risk on’.  But we do so in the clear knowledge that many valuations are high.  Low volatility numbers do not really mean a lot as they tend to be lagging indicators.  We still expect a bump in the coming months.  How big?  Who can say?  What we can say is that we would be likely to use this as an entry point for new client cash and new money to be invested.

Regulatory Notice

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.  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.

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.

Restricted Investors

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.

Our Investment Update

As we move into the summer, there is a growing feeling that equity markets have stalled.  Last week saw many markets slip back slightly amid a series of hawkish comments from key central bankers.  The big move came in oil, which moved sharply higher after several weeks of losses.  Unusually, this move did not lead to the usual upward move in the price of oil related companies – reflecting, we feel, an expectation that this move will be reversed.

The broad economic data was also rather uninspiring.  First quarter US growth was revised upwards whilst inflation slowed slightly.  US consumer sentiment jumped – reinforcing our view that US equity exposure is best positioned towards the US consumer.  Here, in the UK , though it was the reverse and consumer confidence slipped.  We had been expecting this and this was the reason we had reduced our overweight UK equity position to neutral.  Consumer spending is a big part of UK GDP and if it falls then this is a real concern that there may lead to a recession.

Returning to the US, the debate remains ongoing about whether the US ‘big tech’ companies are a momentum trade that is about to unravel or not.  They have been a dominant part of the overall move in the US equity market and some of the recent pull backs have raised concerns about a bubble and it being time to switch into value.  The thing is that this is not an obvious switch – companies like Apple are showing real earnings – not like the previous tech bubble.  So we are more positive and do not share the alarm.

Some of this year’s strongest performers have been the emerging markets.  Inevitably, given the huge diversity of these economies, performances have varied widely.  Smart investors view these markets, and particularly the smallest frontier markets as an opportunity set rather than a cohesive asset class for just this reason.  And they focus on companies rather than broad country exposures.  The ‘excitement’ of investing in these areas has been vividly illustrated by the Brazilian President being charged with corruption whilst hand grenades were dropped on Venezuela’s Supreme Court.  But the scare stories of political shenanigans should not conceal the very real opportunities on offer.

Looking forward, there is little exciting short term news flow expected – well, economically at least.  After last Saturday’s result, hopes for good news out of New Zealand have increased.  A series win for the Lions would be simply spectacular.  We can but hope…

Regulatory Notice

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.  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.

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.

Restricted Investors

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.

Our Investment Update

With so much having been written about the Election over the weekend, we have no intention of adding more than is absolutely necessary.  Despite what some seem to think, the world has not ended with the loss of the Conservative majority.  And the equity market reaction would seem to reflect this – the FTSE 100 closed down a mere 0.27% on the week.  Of course, the story there is the usual “they earn so much from overseas that they’re not really UK companies and a weak pound is good for them.”  Fair enough but, interestingly, the more domestically focused FTSE 250 fell by only 1.16%.  Added to that is the 11.49% return from the FTSE 250 over the last six months as compared to 8.24% for the FTSE100.  Arguably, a bit of froth got blown off the top.

More importantly will be the coming months when we get more of a feel for consumer spending.  In addition to some scaremongering over business confidence this morning, news from VISA suggested consumer spending is falling.  One data item does not make a trend so in isolation this is of limited value.  Should it become a trend, though, then that would be of more concern.  Consumer spending is some 60% of the UK’s GDP so it matters a lot and a sharp fall could trigger a recession.

After such an unashamedly parochial focus on the UK recently, we will be looking at our overall positioning over the course of this week.  Quite frankly, it will be something of a relief to get away from the political noise and to focus on the other underlying factors driving markets.  We still believe there are some important themes in markets, including the resurgence of emerging economies, the increased interest in European equities and what the future holds for the US.  We will share the outcome of those deliberations soon.

Regulatory Notice

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.  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.

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.

Restricted Investors

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.

Our Investment Update

The outcome of the General Election has turned out to be probably the worst possible from the perspective of investors.  This is not a political observation, simply recognition that we now have a raft of uncertainties ahead of us.  It is little surprise that sterling has fallen, or that the larger UK companies, with strong overseas earnings, opened higher and the more domestic-oriented medium sized companies slipped back.  The question, though, is what do we do now?

In order to answer this, we need to consider where we are.  Overall, the UK economy has been in pretty good shape.  Despite some dire predictions, it has actually proved to be one of the stronger global economies.  There are, though, some challenges.  However, this growth has slowed recently and there are some worries over consumer confidence.  The prospect of a tax and spend government may have receded, for now, but a slowdown in consumer spending would not be good news.  The concern is that it might translate into a recession – not necessarily a bad one but, nonetheless, not something investors would welcome.

Reacting too quickly in circumstances like this is not always the wisest thing to do.  To be clear, this is not a crisis – no matter how much some parts of the media may want to build it up to be.  We want to reflect carefully on the medium and longer term implications before taking action.  This outcome was one that we had specifically considered and we had reviewed our positioning accordingly.  Our larger companies’ exposure, together with our international – particularly our US dollar exposure – should be real beneficiaries today.  Our focus now will be on how best to adapt our positioning to address the coming months rather than days.

Regulatory Notice

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.  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.

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.

Restricted Investors

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.

Our Investment Update

In US dollar terms, global equity markets enjoyed yet another good week – although translated into sterling things looked slightly weaker.  The major US indices saw more record highs and, in Japan, both the TOPIX and the Nikkei moved sharply higher.  Expectations of volatility, reflected in the VIX Index, remain low and that niggling feeling that things might be a bit too complacent is not going away.

Clearly, for UK investors the focus is on the forthcoming General Election although campaigning has rightly been pushed into the background by recent horrific events.   With days to go now, the usual questions of what will happen to which assets under a variety of scenarios are being asked.  As is also usually the case, these are of limited value and things are unlikely to change radically whatever the outcome.  The one area that is expected see a reaction is the Pound sterling.  But, again, will it react the way the pundits claim?  Quite possibly not…

Amid all of this the temptation to sit on your hands and do nothing is very strong.  But it is not the right thing to do and we are continuing our programme of adding to our emerging markets positions.  This might seem at odds with our fears that things are too complacent – surely that implies there may be a pullback and a lower entry point?  That is, of course, possible – but micro timing markets is foolhardy and we remain focussed on strong markets and longer term fundamentals rather than short term guesses.

Regulatory Notice

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.  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.

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.

Restricted Investors

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.

Our Investment Update

Global equity markets enjoyed another good week – especially in the US, where record highs were seen again.  It was good to see this based upon good earnings numbers and more good economic data.  This positive economic tone was underlined by the International Monetary Fund which has revised its forecasts for global growth from 3.1% to 3.5%.  With the UK now said to be in line for 2.0% growth, we are reassured to see our confidence in the domestic economy being reinforced.

We have been holding a thematic bias towards global equity income for some time now which has performed strongly.  We accept, of course, that much of this has been currency related given the US bias in this exposure.  Equity income has been very attractive for those seeking yield, given the pathetic yields available for more traditional fixed income investments.  Looking forward, though, whilst not negative we do feel there are other opportunities where we can achieve better returns and so we are going to take profits here and reduce our exposure.

In terms of the opportunities, we are still favouring emerging markets.  Having been, arguably, somewhat early to build our positions in these markets, more recently we have seen a resurgence of interest amongst investors.  The flow of funds into these markets has been substantial and they have responded by showing solid gains in many cases.  As this has happened, we have adjusted our exposures and, most recently, we have also brought in a focus on Russia and have built in a bias towards the improving frontier markets.  We intend to use the proceeds from our profit-taking in the equity income positions to add to both our broader emerging markets positions and also to the frontier positions, where we believe there is less correlation to developed market equities.  This move might be seen as adding a bit more risk into the mix, given the more volatile characteristics of emerging markets.

We remain mindful of asset valuations, the geo political background and, of course, the forthcoming General Election.  All of these could give reasons for pull backs in the short term but we remain focussed on the underlying good news.  We are doing this very much with our eyes open and the overall impact, given the previous steps we have taken to de-risk our overall exposure is something we are very comfortable with.

Regulatory Notice

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.  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.

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.

Restricted Investors

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.