A brief insight into the latest market dynamics and details of any changes occurring within our model portfolios.
Gary’s Market comment
The UK economy grew by 0.3% in the first quarter of 2017, mainly due to a slowdown in the service sector which sank by 0.5% compared with the 4th quarter of 2016. This sector represents 78% of the UK economy. Much was attributed to the uncertainty over Brexit and the weakness of the pound.
European economic confidence jumped to its highest level in almost a decade according to the European Commission.
The US economy grew at its slowest rate for 3 years in the 1st quarter of 2017 with consumer spending faltering and businesses investing less.
Updates from our Investment Partners
Fund Update: Marlborough Multi Cap Income Fund
Earlier this week, LGT Vestra had an update with the Marlborough Multi Cap Income fund team. The team’s focus is on the quality and sustainability of dividends. The fund is based around the management team’s stock picking expertise, with the added requirements of income and growth. The portfolio exhibits a strong bias to small cap and smaller-mid cap stock. The portfolio is diverse, with over 135 holdings, position sizes ranging up to 2.5%, which currently has a broad sector allocation to Financial Services (12%), Support Services (12%), REITS (6%) and Travel & Leisure (8%).
In the weeks following the Brexit vote last year the fund, like most other UK small and mid-cap funds, experienced a sharp drop. However, since the lows of June last year, helped by a positive sentiment towards the UK small and mid-cap space, the fund has performed really well. In general, they were relatively upbeat on the overall outlook for the fund and don’t feel valuations are extreme and will continue to invest in a diversified manner. Sentiment from company management teams are generally upbeat.
Macron’s move to pole position within the French presidential election represents much less uncertainty for Europe than his far right opponent and is much more pro-business. So, with less political risk on the horizon, markets should now benefit from the good macroeconomic backdrop and the stronger earnings being posted by companies, and move higher still than they did last week.
As a result, 7IM added to the Euro Stoxx 50 Index positions and increased their Euros exposure as part of their currency allocation. Using the 7IM balanced profile as an example, they added 3% to the equity markets and 4% to Euros.
Sources: LGT Vestra and 7IM
