European Equities, two years after the Brexit referendum

Brexit referendum brief review 

In this paper, we will take a closer look at the current environment in Europe two years after Brexit referendum, as well as state of European companies and corporate activity to finally explain why our pragmatic investment approach could be the most suitable for what seems to be a tricky year.

Riding through industry “mini-cycle” with alpha-driven active funds and diversification

Global Tactical Asset Allocation

• Global growth is still sustained but momentum has weakened in Europe and Japan; industry has entered a “mini-cycle” that temporarily moderates activity.
• Inflation is rebuilding and the process is more advanced in the US; the Fed will continue to lead the normalisation of its key rates.
• We stay neutral risk in our overall positioning. While we reduced the directionality in our equity exposure, we remain invested through low beta vehicles such as hedge funds and structured products, as well as convertible bonds.
• Diversification and downside protection are key to cushioning our portfolios in the current market environment.

Protecting our portfolios from rising market volatility

Global Tactical Asset Allocation

• Global growth looks strong, but it is no longer accelerating and headwinds have appeared related to the new US trade policy and rising fears of protectionism.
• Inflation is progressively rebuilding and central banks will remove their support and enter a gradual tightening.
• We moderated the risk in our portfolios to neutral by cutting our overall equity exposure, reducing credit risk. We are now seeking opportunities to add government bonds, given the regime shift in market volatility we have been witnessing since the beginning of the year.
• Diversification and downside protection are key to cushioning our portfolios in the current market environment.