deVere Group - International Investment Strategy

International Investment Strategy

deVere Investment Strategy aims to provide clients with a comprehensive picture of the global economy and regular updates on current stock market and fixed income trends, in order to assist investors in making informed investment decisions. It is headed by Tom Elliott, deVere's International Investment Strategist, who produces regular videos and blogs on a wide range of topical investment issues, and regularly speaks at seminars for clients at deVere offices around the world.

The core-satellite approach to investing has several advantages over buying a multitude of separate, high risk investments. The bulk of the portfolio is handed over to a professional multi asset investor, who is qualified to match expected returns with expected levels of risk. The satellite investments allow the client to try to 'beat' the market with higher risk investments, but total portfolio risk is reduced through setting a limit on the size of the satellite allocation relative to the core.

Note: The information contained in this chart is for general guidance on matters of interest only. The deVere Group disclaims any responsibility for content errors, omissions, or infringing material and disclaims any responsibility associated with relying on the information provided herein.

Tom Elliott

International Investment Strategist

Tom Elliott is the deVere Group's International Strategist. His role is to help the Group's clients to better understand the economic and political influences that drive capital markets, which in turn drive investor returns.

Tom, formerly an Executive Director at JP Morgan Asset Management, has 25 years experience in the financial sector.

He is currently a visiting lecturer in the department of political economy at King’s College, London.

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Tom Elliott
Recent Broadcasts
Video
December 08, 2017

The soft Brexit deal: Good news for the U.K
Tom Elliott

Thanks to pressure from the Republic of Ireland this week, the 8th December agreement on Brexit divorce terms suggests strong U.K regulatory ‘alignment’ with the E.U will persist after Britain leaves the E.U. The ambiguity of the text makes it difficult to work out its substance, but this suggests that U.K is now course to remain in the single market and customs area for agricultural and manufactured goods. This is good news for sterling and the U.K economy.

Older posts

Explaining the Sharpe and the Information ratios
Tom Elliott, deVere Group's International Investment strategist, looks at two of the most widely used metrics in fund management for assessing performance.
October 09, 2017

Why Invest in Bonds?
Bonds continue to be a valuable source of diversified returns within a multi-asset portfolio.
August 30, 2017

Stock market investors should not fear the new tone coming from central banks
With inflation at or below central banks target rates in all the major economies except the U.K, the current market fear of a coordinated tightening of global monetary policy appears unwarranted. More credible risks to stock markets include the risk of a credit crunch in China, some over valued risk assets such as US tech falling out of fashion
July 06, 2017

U.K politics: chaotic, but potentially good for investors
In view of the chaotic state of the U.K government following last week's general election, investors might be surprised at how little sterling has fallen and U.K stock markets have been affected. This may reflect the fact that stronger economic growth is forecasted under a soft Brexit, which now appears possible, and with an easing of fiscal austerity.
June 13, 2017

Should we be concerned about low volatility in capital markets?
Tom Elliott explains why fundamentals are still good for stocks, and why any market correction over the coming months is likely to be temporary.
May 18, 2017

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Blog
November 30, 2017

Investment Outlook
Tom Elliott

 

Near-term market sentiment: Less nervous, with most risk assets having more than regained the losses sustained mid-month. The MSCI World index is now 20% up in USD terms, 16% in local currency terms. The S&P500 continues to reach new all-time highs, hitting 2,627 yesterday. A combination of good economic data, from Germany in particular and the euro zone in general, and minutes from the Fed’s last policy meeting that suggested -to some analysts- a slower pace to interest rate rises for next year than expected, has helped investor sentiment. Appetite for risk assets is perhaps illustrated in recent Bitcoin prices, where we have this week seen the price nearly double from the month-low of $5,800 on November 11th.

Outlook: A comment on the flattening of the U.S yield curve is called for. The spread (ie, difference) between the 2yr and 10yr Treasury yield stands at just 0.59%, a near low for the year. There has been much talk in recent weeks that the narrowing of long/short bond spread heralds an imminent recession. Apparently every U.S recession since WW2 has been preceded by a flattening -and an eventual inversion - of the Treasury yield curve. Why else would investors accept a relatively low premium for holding long dated paper, with the risk of inflation eating away at the real value of the yield, unless they believed that long term inflation will be weak? And why would inflation be weak? The implicit answer is: because of a recession. For market bears the flattening of the yield curve is therefore a Matter of Significance.

But many instances of yield curve flattening have not been followed by recessions. Indeed, as we discussed a fortnight ago a recession in the U.S, or in any major economy, appears unlikely -at least in the near term – given the recent upgrades to world GDP growth by major financial institutions, notably the IMF in October. The increase seen in global corporate earnings in third quarter results appears sustainable. Fears that the Fed may accidently tip the U.S into recession by raising interest rates too high, too soon, are overblown. Its monetary policy tightening - which includes the unwinding of its quantitative easing program-  is likely to continue to be done at a cautious pace, and ‘data dependent’, when Jerome Powell takes over as chair, in February.

The risk of an imminent recession in the U.S are therefore slight, and so long as corporate earnings growth persists against a backdrop of around 3.6% global GDP growth, a sustained bear market for risk assets in the near future appears unlikely. But this is not to exclude the risk of near-term market correction – often defined as a fall of around 10% - that may happen if end-of-year profit taking triggers a more broad sell-off, particularly by leveraged investors. I expect the current low risk-free rates on offer to investors (eg, bank account cash rates and core government bond yields) will limit the extent of any such correction, and that bargain hunters will swiftly step in and a sharp recovery will follow.

A multi-asset portfolio for the long term. The chart below shows a typical long-term balanced portfolio based around 60% global equities and 40% global bonds. Financial history shows this combination to offer good returns relative to risk (ie, volatility). Investors should try to be as diversified as possible, perhaps using the 60/40 model as their guide. Multi-asset funds based on this principle are available, often with different ratios of bonds and equities depending on the level of risk suitable for an investor. Note that the chart shows neutral weightings for the long-term investor, it does not incorporate the near-term weighting suggestions of the previous paragraph.

Older posts

Investment Outlook
November 16, 2017

Investment Outlook
November 02, 2017

Investment Outlook
October 17, 2017

Investment Outlook
October 02, 2017

Investment Outlook
September 20, 2017

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