News / Views

Investment Notes

Follow our regular updates to stay up-to-date with current financial planning and investment issues. We regularly publish press clippings, articles and thinkpieces that we think might be of interest to our clients.

Despite the increasing concerns of a Greek default and the additional volatility this has brought to most world markets, we believe that there is more global bloom than gloom; this note explains why current portfolio allocations should be maintained with company shares and commercial property predominating over cash and bonds.

QE moving the Eurozone towards recovery

The ECB announces new policy measures to stimulate the economy

Following the bout of weakness in October, which we commented upon in our note entitled “Keep Calm and Keep Shares”, and the subsequent recovery, company share markets have experienced further volatility, as we expected in the second half of this year (see our 10 July 2014 note entitled “A Quietly Profitable First Half ”).

During the past four weeks, the FTSE 100 index of UK equities has reduced in value by 7.2% and the S&P 500 index of US equities has reduced in value by 5.5% in Dollars. Meanwhile, prices of government bonds have risen as investors reallocate to assets they consider safer.

Angela Merkel’s favourite set of facts about Europe are that it represents 7% of the world’s population, 25% of the world’s GDP and 50% of the world’s social spending.

The US policy of Quantitative Easing (“QE”) is due to end later this year. Growing uncertainty about the evolution of monetary policy as the economy strengthens is likely to contribute to increased market volatility.

At the beginning of 2014 we forecast that investing in markets this year would be less profitable but more volatile than in 2013. So far in 2014, the first aspect of our forecast has been borne out, with most asset classes showing total returns of between 0% and 5%, the major exception being UK commercial property with a total return of about 8%.

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