The perks of investing in interesting times
One of the perks of being an investment manager is the continuously changing political landscape. Brexit, the election of Trump, and the rise of China have all provided a fascinating backdrop to making decisions.
At Parmenion we manage both an active and passive investment solution, plus a tactical ethical option. Changes to asset allocation may be based upon changes in the valuation of asset versus each other, momentum and sentiment, changes in the business cycle, and the political and monetary environment. We hope to identify those asset classes that will outperform over a period of 18 months to three years.
During the past six months we have made some changes to our asset allocation to reflect the changing dynamics on the outlook for various asset classes. First, we have taken some monies from UK equities primarily on concerns about the domestic economy.
Sterling weakness leading to higher inflation, plus a low savings ratio and flat wage growth will result in a weakened consumer. Add Brexit uncertainty and we have become more cautious on the outlook for this asset class. Thus we trimmed our holdings in Lindsell Train, Jupiter and Liontrust Special Situations.
It appears that the prospects for Europe have improved, however. Political risk has lessened with the election of president Emmanuel Macron in France and interest rate rises are likely to lag those of both the US and the UK.
The European Central Bank will be keen to avoid any policy errors and tip the region back into recession. Hence our move to move to overweight European equities.
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The full article was published in Wealth Manager on 24 November 2017
“The above article is intended to be a topical commentary and should not be construed as financial advice from either the author or Parmenion Capital Partners LLP. If a client wishes to obtain financial advice as to whether an investment is suitable for their needs, they should consult an authorised Financial Adviser. Past performance is not an indicator of future returns.”
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