Our Investment Update

Last week saw positive returns from most global equities amid hopes that the US tax reform bill would be passed. Oil remained flat as the OPEC nations agreed that they would keep caps on production next year.  Otherwise, there was little of real interest in the newsflow.  Brexit rumbles on and on, as does the formation of a government in Germany.  But these are largely noise in the media – for now at least.

In recent months we have talked about the dangers of a ‘cosy consensus’ on markets leading investors to overlook the risks that may be out there. However, more recently, we have seen more diverse views appearing.  By way of example, recent research from two major investment banks saw one argue that risk-adjusted returns had “deteriorated” whilst the other that they would be “high”.  Well, that’s what makes a market and, at the very least, one can sell to the other…

So which is it to be? Is it time to sell and move into bonds on the one hand, or double digit equity market returns on the other?   Well our view of the risk/return of anything other than the shortest dated and highest quality bonds remains clear – so that is a route we won’t be going down.  However, nor are we convinced that we will see double digit returns across all major indices.  That is not to say we wouldn’t like to.  It would be jolly nice and would make 2018 a great year for investors.  But from current levels, we feel double digit returns are unlikely.

We have been, and remain, optimistic for equities and our views are unchanged. Nor is our wariness over a short term pullback.  The Bank for International Settlements became the latest institution to warn about ‘frothy’ valuations.  It does leave new investors with a tricky choice.  To invest now and risk missing a chance to buy in at lower levels in the near future?  Or wait and see in cash and watch prices grinding slowly higher?  Our view is that this sort of timing is impossible.  Cash offers no real return – and even if prices dip slightly, many equities offer attractive dividends.

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 Perspective

In our update last week, we highlighted some of the questions and challenges facing investors, and noted that we would be scrutinising our own positioning in the light of these. Our starting point for this was to look at how we had got to where we are now.  We entered 2017 in a positive but wary frame of mind.  This was the result of a belief that, despite mixed macro data, the global economy would continue to grow but also acknowledging that there were some big political events looming which had the potential to rattle nerves.  This led us to retain a ‘risk on’ position with an overweight allocation to equities.  It also led us to have a sizeable location to gold and precious metals which, although regarded by us, at least, as a risky asset, also offered a hedge in the event of a systemic equity market pull back.  Finally, we didn’t like bonds – too expensive and too risky, on the whole, so we felt much safer in short dated, high quality ‘cash plus’ positions.

So how did things play out? The answer is pretty much as expected.  The global economy did, indeed continue to grow and the consensus view suggests that the turning point was in the early summer.  Since then, most indicators have picked up and the Goldilocks scenario seems to be playing out.  Against this background, our hedge is no longer necessary and we are reducing our position in precious metals.  It is fair to say that this position has not paid of for us.  Equally, though, we know why we had it in place and accept that we were, for want of a better phrase, ‘wrong for the right reasons.’

Our equity market positioning has paid off well in most cases. We have been long term enthusiasts for Asian and emerging markets – and frontier markets in particular – and this has been an area of strong returns for us.  For the foreseeable future, we are keeping these positions and are adding an Asian larger companies position to our existing Asian smaller companies allocation.  Our Japanese allocation has been very small and this is one that we missed.  Japanese equities are close to 25 year highs but, frustratingly, we have been slightly underweight here.  We have no intention off trying to play catch up by adding to our holdings at these levels.

Elsewhere, we are retaining our current positions in Europe, the US and our thematic allocations to infrastructure and technology. In the UK, however, things are in need of being watched closely.  We are de-risking by taking out our direct smaller companies positions.  This is against the background of concern over the impact of Brexit on the economy.  To the two existing scenarios – ‘hard’ or soft’ exists – we would add a third.  No Brexit.  Yes, many will doubtless disagree but we think that the possibility of the Conservative government falling and Brexit being stopped cannot be totally ignored.

For some time, we have been warning of the possibility of a sharp pull back in equity markets. And it has not happened – yet at least.  Are we paranoid and scared of monsters under the bed?  Perhaps – but we would prefer to refer to it as being prudent in the face of  markets that have truly climbed a wall of worry without any significant correction.  The simple problem is that predicting short term corrections is impossible.  They also tend to rebound almost as quickly as they occur.  Given our optimistic view in the medium term we do not want to be ‘out of the market’.  Nor do we want to be whipsawed by jumping out in trying to get back in again.  There really are times when taking a longer view and accepting that volatility may pick up are the right things to do.

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. 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

Stable and low inflation coupled with solid global growth should equal happy days for investors. Many call it a ‘’Goldilocks’ scenario and, for now at least, the expectations are that it will continue.  Central banks are perceived as ‘dovish’ and showing no signs, at the moment, of a desire to rattle markets by raising interest rates too sharply.  This should mean the outlook for corporate earnings will remain sound and consequently translate into a positive outlook for equities.

There are, though, key questions we need to answer. Which markets stand to benefit the most? How much of the current good news is priced in already and what does that imply for returns?  What other asset classes should we look at?  And which ones should we avoid?  These will be the subject of our scrutiny this week and we will share the conclusions of this in the coming 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

Our Investment Update

Autumn seems to have brought a renewed sense of confidence to equity investors. Nervousness and the sense of complacency that we have alluded to before seem to have been replaced by a conviction that the broad global economic outlook remains solid and that, in turn, bodes well for corporate earnings.  Recent results from the US ‘Big Tech’ companies reinforced this mood and propelled the S&P500 to another all time high.

It is not just in the US where the mood has picked up – European equities continued to attract interest as well. The European Central Bank’s recent statement was interpreted as ‘dovish’ and equity prices increased on the back of it.  The kerfuffle over Catalonia was largely put to one side – at least for now.  In the Far East the story was equally positive.  Japanese equities moved higher – unsurprisingly on the back of a weak yen.  In fact, since the election win by Prime Minister Abe, Japanese equities have moved strongly higher.  They are seen as increasingly attractive with some USD2.7 trillion of cash reserves and trading on a price/earnings of 14.6 against 16.3 for the MSCI World Index.

Unfortunately, the positive mood did not seem to rub off on the UK. Prices have largely drifted back since their recent highs as worries over Brexit continue and the doomsayers pounced on the Confederation of British Industry’s recent survey that showed retail sales are falling.  Whether it is a function of Brexit fears or of inflation eroding consumer spending remains moot.  What is clear is that sentiment remains vulnerable amid the current mood of uncertainty.  That and, of course, the imminent rise in UK interest rates.

With so much confidence in the strength of the global economy, surely it must indicate happy times ahead for markets? Perhaps – but experience tells us never to confuse markets with economics.  Sentiment can switch quickly and our wariness of an unwinding of positions in a ‘risk off’ phase remains.  Markets simply do not move in straight lines and being prepared for drawdowns is common sense.

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 Monday, we commented that, “Global equity markets moved higher again last week with the S&P 500 Index reaching its forty second all time high for the year to date.   At the same time, implied volatility (measured on the VIX) remains near record lows.  It still leaves us feeling a little nervous – especially as the last significant market correction was so long ago.”  Here we are, a week on, and that sums things up equally well today.

We also noted last week that, “Economically, the world still seems to be in good shape and it is this background that is giving investors confidence.”  This message, too, has been reinforced by comments from the International Monetary Fund (‘IMF’).  The Fund’s Chief Economist, Maurice Obstfeld, said last week that the current acceleration in global growth is broader based than at any time over the past 10 years.  The IMF increased its forecasts for economic growth for 2017 and 2018 to 3.6% and 3.7% respectively.   With inflation remaining largely under control, there is every reason why investors should be confident.  Confident but not complacent.

We are still concerned that such low levels of volatility may have led to complacency and to positioning in risk assets that might not otherwise have been taken. This has the potential to unwind fast if a ‘risk off’ mood prevails.  If it does, a short, sharp shock might result.  So prudence remains the watchword – recognise that short term returns may be limited and that short term risks are likely to be higher than is priced in.

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 moved higher again last week with the S&P 500 Index reaching its forty second all time high for the year to date.   At the same time, implied volatility (measured on the VIX) remains near record lows.  It still leaves us feeling a little nervous – especially as the last significant market correction was so long ago.

Economically, the world still seems to be in good shape and it is this background that is giving investors confidence. The US led the global recovery and remains furthest along the cycle.  In fact, research by Société Générale highlights that the 100 months of expansion seen in the US economy is the third longest run since 1854.  Any sign that this cycle is ending would give us the shivers about the end of the bull market.  So far, as we have said before, this is not something we envisage.  That said, on current valuations, it is getting harder to see how much more progress US equities can make.

This side of the Atlantic, the British media continues its obsession with Brexit and the Conservative Party’s perceived woes. Europe, though, has other things to think about, not just the bad stuff like the Catalan crisis, there is good news too – for example the surprising strength of the French economy.  Against this background it is little surprise that the pound has remained under pressure.

We remain optimistic in the medium term whilst more wary in the short term. This is not a new feeling for us but, so far, our fears of a pull back have not materialised.  As a result, we continue to adopt a prudent approach to investing new money and are focusing on progressive investment on bad days.  Those fully invested need steady nerves – micro timing markets is a fool’s game and our longer term optimism suggests remaining committed to risk assets is the right thing to do.

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 a background of ongoing geo-political issue, financial markets were pretty calm last week. Depending on whether one’s outlook is bullish or bearish this was seen as either a pause for breath after recent rallies or a sign that complacency has set in ahead of a setback.  If the VIX is to be believed, expectations for volatility remain very low – although we know how quickly that can change.

In the US, the Federal Reserve made its position very clear in its announcement last week. It has some USD4.5 trillion of Treasuries and mortgage backed securities and has now set out how it plans to reduce this – the buzz phrase is ‘balance sheet normalisation’.  At the same time, there were also clear messages that growth is solid, that inflation will be lower than expected at 1.5% and that another rate hike is likely before the end of the year.  All in all just the sort of clarity that markets like.

In Europe, today has been all about the German Election. Doubtless there will be more column inches on this but at least it makes a change from the tedium of Brexit coverage.  We are still positive in our views on Europe as an area for investment and this does nothing substantial to change that position.

We have also heard that there will be an early election in Japan. It has been reported that Japanese Prime Minister Shinzo Abe will dissolve parliament on Thursday.  And he has announced a stimulus package.  Yes, the usual paraphernalia.  This time it will be two trillion yen and focus on debt reduction and education.

Overall we still remain optimistic for most equity markets – albeit with modest expectations for returns in the short term. So what has happened to our sense of unease over valuations?  Well, it has not gone away.  At the moment, though, it is hard to see a clear trigger for a systemic pull back.  Although, would we really expect to?  For now, cautious optimism is the order of the day.  We continue to commit new money to areas where we have the highest conviction – frontier and emerging markets, Asia and Europe.

 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 Perspective

Another North Korean missile fired over Japan and the Japanese equity market turns in one of its strongest weekly performances for some time. The positive tone was echoed in the US – despite some softer economic data – and in Europe, too.  In the UK, though, where the Brexit rumblings drag on and on, the FTSE 100 Index pulled sharply back.  This was, apparently, fears over the impact of a stronger pound.

In the UK, there seem to be two views emerging. On the one hand, there are those who see Brexit as a rapidly looming calamity with consumer spending and the pound set to collapse, international trade drying up, a recession the inevitable result and interest rate rise an act of self-harming.  On the other are those, such as the Centre for Economics and Business Research, who today pointed to a more optimistic outlook, suggest the worst of the consumer slowdown is over and argue that a small rate rise is prudent to control inflation.

We do not entirely agree with either viewpoint. Yes, Brexit might – probably will – cause more problems.  But we see these as short term.  Equally, we do believe that it is going to be tough to escape entirely unscathed economically from Brexit and imprudent rate rises would not go down well.  There is simply to much speculation and dancing around the issues at the moment.  Was the fall in the FTSE 100 Index last week really down to fears over the value of the pound?  We do not think so.  Blaming the pound made a good excuse to bank some profits and blow a bit of froth off the market – probably no bad thing.

Once again, our worries over valuations and the prospect of a systemic pull back have not proved correct. That is good news as we have, despite a slightly more defensive positioning, remained risk on.  With our positive view of the world in the medium term we continue to favour equities.  The difficulty remains where to put new money to work?  For now we would propose our higher conviction markets – Asia Pacific, Europe and emerging markets.  Elsewhere, look for bad days to build positions.  And do make sure there is an appropriate allocation to lower risk assets and diversifiers such as gold.

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 Perspective

Equity markets had little direction last week as the reality of the horrific power of hurricanes pushed Korean sabre-rattling of the headlines. The flow of economic data provided little direction – the European Central Bank leaving rates unchanged coming as absolutely no surprise whatsoever.  Amid all this, demand for US Treasuries picked up and the 10 Year yield fell to 2.06% whilst the US dollar hit its lowest level since early 2015.

We still remain wary of both equity and bond markets at current valuations. It is fair to say that we have had this feeling for some time and have talked often before about why we have adopted a more defensive stance.  The key questions are has this stance been justifiable and has it caused us to lose out on any opportunities?

As far as we are concerned the answer to the first question is a resounding yes. Stepping away from the day to day for a moment and looking at the scale of some of the challenges markets have faced recently leaves us in no doubt whatsoever.  We have acted prudently and will continue to do so.  But what about missing out on the opportunities?  We do not feel we have in any meaningful way.  Key equity markets have largely traded sideways and we have kept an overweight equity position anyway.  The area that has powered ahead has been emerging markets – and these are our biggest overweight position.

So we are eying up the coming final quarter of the year with mixed feelings. From a purely parochial perspective, we are increasingly nervous about the UK and whether there may be a technical recession in the coming months.  Our view of the consumer related sectors has reinforced this and we would be wary of adding to UK equity positions at this time.  The rest of the world looks more interesting.  The systemic equity pull back we expect would be welcome for those with new money to invest and should, as we have said before, be viewed as an entry point by them.  For the rest, keep focused on the longer term and avoid tying to get too clever with market timing.

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

Hydrogen bombs going off are not normal events but global financial markets shrugged off the latest big bang in Korea and equity markets, in particular, moved higher.  Whilst fully valued – or even expensive in many cases – at least the flow of economic data is supportive of this.  Nonetheless, we are still expecting something of a pull back.  Perhaps, in the region of 5% to 10%.  This leaves something of a quandary – to stay invested or to de-risk?

In fairness, we have been here before. In fact, it was only last year that we wrote, “Normally one would hope to have an alternative to richly valued equities – but bonds are expensive too.  That means it is very difficult to see obvious places to put your money.  What felt like a cosy and optimistic consensus a few months ago is now starting to feel more like nervous inertia.”  Definitely a bit more than déjà vu – but then we did go on to say, “Unless you expect a full blown meltdown – and we do not – then focusing on acquiring good quality assets at favourable prices remains the smart thing to do.”

A year on and we can only reiterate that point.  We have talked a lot recently about why we remain positive in the medium term despite some shorter term nerves.  It is the opportunity presented by such nerves being translated into a pull back (or correction or whatever else you want to call it) that should enable the acquisition of those quality assets.  The word quality matters, though.  We have seen only too clearly how quick the market is to punish companies that lack it and fail to deliver.

Our past really can inform our future.  Last year we said, “Our strategy has been put in place to address these current uncertainties. J udicious diversification, including positions in gold and cash, means that we have the ability to ride over short term bumps without panicking.”  Frankly, this approach remains sound. There will be problems thrown at markets – whether they are big bombs or more political skullduggery over Brexit.  Focus and common sense need to be applied and, as usual, that focus needs to be on the wood and not the trees.

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