Data key as wealth managers gear up for volatile summer
By International Adviser, 1 Apr 16
Like Janet Yellen’s Federal Reserve, it would appear that UK wealth managers are planning to be very data dependent in the second quarter.
For domestic investors, Brexit is going to be a key determinant of returns. On a medium to long-term view it isn’t going to change our asset allocation, but in the short term it is definitely going to distort markets. Particularly in terms of how much is held in sterling assets given how much of a bell weather the currency is.
Since the depths of February, there has been a rally in markets and, if we do see a further rally it might be a good time to raise some cash ahead of the Brexit vote.
We have started to raise a little cash, but not yet a significant exposure. We tend only to do that when sentiment is exuberant and valuations stretched.
The other area we have been looking at recently is infrastructure. It is a sector that can be quite sensitive to interest rates, so are revisiting the area given our reinforced ‘lower for longer’ view . And, with QE not providing the levels of growth that central banks had hoped, we might see more fiscal stimulus, which could, in part, take the form of infrastructure spending.