Proposed Changes to Your Portfolio:
To kick off the new year, the investment team remains focused on interacting with all existing fund managers currently managing assets held in our portfolios. We can use these meetings to ensure that their views on the year ahead are factored into our thinking regarding our goals and objectives.
On balance, general market sentiment seems to be net-positive; the general consensus is that 2020 will not reward the cautious. Our clients have a long-term investment horizon and as markets have proven, over the long term they rise. The UK in particular has some relative catching up to do with wider global markets and the 'Boris Bounce' is already evident. This optimism supports our reduced cash strategy. That being said, although this is a positive move into the market, we are still not overly positive with our market sentiment.
This move reflects a rise from 15% to 35% confidence, so we are still somewhat cautious.
As Markets have responded well to increased Brexit certainty and most investors appear more optimistic towards 2020, we feel we should move slightly more into the market and increase our confidence in the macro-economic outlook. We do not want to make any rash decisions on the back of short-term movements, nevertheless we feel that for a longer-term view, higher exposure to investments will be beneficial to our clients. Therefore, we have launched our new Tactical portfolios this week.
While we note the new all-time highs achieved by US equities driven by the relentless rise of technology share prices and buoyant market liquidity, it is fair to say that many other sectors have experienced mixed fortunes. While the US market has however historically done well during election years, investors are still eyeing corporate earnings expectations and share price valuations. In the UK, domestic equities are broadly under owned by investors and are forecast to perform under such circumstances where the UK leaves the EU with a deal. Other opportunities may arise in European markets, where Financial and Manufacturing companies trade on cheap valuations. One caveat here for global market sentiment however is how prospects for China unfold as it continues to re-balance its economy.
We have also increased our positions in certain core specialist funds where we have been long term holders in other portfolios as these have more defensive characteristics coupled with specialist market exposures that will serve to increase diversification of this portfolio.
February 2020 Aims
Our main aims for February are to continue our analysis of our existing funds to ensure that we would still invest in the same holdings with new monies at this point in time. Additionally, we aim to continue our search for new managers which may provide better investment opportunities, or funds which may provide certain opportunities if the market direction were to change in a predictable manner.
We also aim to consolidate the successes and setbacks we experienced in 2019 in order to move forward and implement our decisions and changes more efficiently and to continue to improve the value of service we provide to our Clients.
Moving all clients into Tactical V20A is also a top priority for us in the Investment team as we feel like our new portfolios give our clients the right amount of exposure in the current climate.
Following our recent attendance at various professional investment conferences, our predictions have been confirmed that 2020 should produce a year of solid returns, but they are highly unlikely to be as rewarding as the unexpectedly exceptional year we have just left behind. Despite the long list of uncertainties and worries, virtually all asset classes produced positive returns, driven upwards by increased central bank liquidity around the world.
The most impactful ongoing matter, brought with us from 2019, is the US/China trade war. The 18-month long dispute over trade deficits has not only contributed to a global trade contraction but has been an additional factor in the Chinese economy achieving its slowest growth rate in 30 years. Furthermore, European nations have also been targeted by the US with aircraft, wine, cheese and whisky tariffs in order to address their massive trade deficit and in response to technology company tax proposals by the French Government. Unfortunately, the time frame to resolve these issues is more than likely to be extended despite a stage one agreement due to be signed in January because of the complexities that remain.
Other events that may well influence the market performance in the UK are Brexit, as we enter the final year of negotiations and in a broader sense, the health of the global economy. Investors will be watching the new Johnson Government to see which direction it takes in terms of public finances, the Spring budget and how the economy is to be re-balanced.
The Coronavirus first appeared in Wuhan in December 2019, since then over 100 people have died as a result of the virus. Various comparisons have been made with the SARS outbreak in 2003. Information is now far more readily available and advances in science mean that the virus has been quickly sequenced and this data has been communicated globally. Although viruses such as this can have a negative short term impact on stock markets, in particular emerging markets, we do not believe that this poses a long term threat to our portfolios, which are very well diversified. There is also potential for a short term impact on economic activity but Governments, especially China will be watching closely and taking mitigating action accordingly.
Portfolio Key Details:
Individual Fund Performance:
- Top 3 Performers:
- Bottom 3 performers
Name of fund
Since January 2020
Since Last Report (06/12/19 - 13/01/20)
Scottish Mortgage Investment Trust
Janus Henderson Global Technology
AXA Framlington Global Technology
This based on our understandings as of January 13th 2020. Data sourced from FE analytics.
Name of fund
Since January 2020
Since Last Report (06/12/19 - 13/01/20)
Baillie Gifford Shin Nippon
Allianz Gilt Yield I Inc TR in GB
Threadneedle UK Property
This based on our understandings as of 13th January 2020. Data sourced from FE analytics.
Reeves Independent Confidence Meter:
The above meter represents our confidence on the short term prospects of the global equity markets in the upcoming months. Please read our Market Outlook Reports on a monthly basis for more information.
The information in this blog or any response to comments should not be regarded as final advice. Please remember that the value of your investment can go down as well as up, and may be worth less than you paid in. Information is based on our understanding at January 2020.
Data provided by FE. Care has been taken to ensure that the information is correct but Reeves Independent neither warrants,
represents nor guarantees the contents of the information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Financial Express Limited Registration number: 2405213. Website:www.financialexpress.net