At the end of a quarter dominated by the UK’s decision to leave the EU, we stand at a cross-roads: risk‑friendly assets, such as
equities, were mostly positive, but risk-averse assets, such as government bonds and gold, also made substantial gains. In essence, bullish equity and bearish bond markets are giving us divergent signals about the world economy. While we are no strangers to such short-term dichotomies, in fact they happen more often than one might think, we are also cognisant of the fact that they do not last long, unless central banks are determined to intervene in normal market operations.
Our Investment Committee decided to adopt a more cautious and international strategy for our portfolio range. We reduced exposure to UK risk assets, reflecting heightened uncertainty regarding the country’s economic conditions and the course of Sterling. Conversely, we increased exposure in US risk assets, since we believe that the US Dollar could continue to act as a safe haven, as well as exposure to gold.
Download the full newsletter to find out more.