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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Video
July 06, 2017

Stock market investors should not fear the new tone coming from central banks
Tom Elliott

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

Older posts

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

Article 50 and the UK Stock Market
The forthcoming Brexit negotiations will focus on the exit terms and the status of nationals working abroad. In all likelihood a new replacement U.K / E.U trade agreement will not be in place by end of March 2019, leaving the U.K to conduct its trade with the E.U under WTO tariffs. As this becomes apparent, shares in domestic-focused companies may suffer relative to those of FTSE100 multinationals.
March 24, 2017

Outlook for Capital Markets in 2017
Tom Elliott identifies Donald Trump's fiscal stimulus of the U.S economy as potentially the single most important economic theme in 2017, with implications for global capital markets.
January 04, 2017

Wall Street under President Trump - a boom and bust scenario?
Tom Elliott asks if lower taxes and increased infrastructure, together with curbs on immigration and tariffs on imports, might cause a short boom in domestic demand and corporate earnings. As inflation gathers pace and interest rates rise, markets may then panic.
December 07, 2016

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Blog
August 13, 2017

Investment Outlook
Tom Elliott

Near-term market sentiment: Apprehensive. The benefits of a broadly diversified multi-asset portfolio were highlighted last week, as investors rushed into defensive assets. This was in reaction to a bellicose response from the White House in response to North Korea’s latest testing of its missile technology. Core government bonds rallied, global stock markets fell with growth-orientated (i.e. higher risk) stocks falling further than value stocks. The Swiss franc and the Japanese yen, traditionally defensive currencies, rallied. By the close of U.S trading on Friday, however, there was however a sense that megaphone diplomacy from Trump was being tempered – not least by comments from China – and a recovery began in risk assets. This may continue into early next week, assuming Trump withholds from Tweeting on the issue. All of which demonstrates why, as we wrote last week, investors should remain diversified with exposure to both defensive assets as well as risk assets (e.g. stocks and high yield bonds), given the unpredictability of market movements. The model portfolio below offers a guide as to how to achieve this.

Longer-term views: As has been written before in this note, we believe that the current equity bull market is fundamentally sound, supported as it is by low interest rates and bond yields. As long as these remain low, there is little likelihood of an end to the’ hunt for yield’ that is driving stock markets high yield debt prices ever higher. Demographic factors, weak public and private sector investment in the West, and a surplus of household savings in Asia, all suggest low yields across the maturity spectrum could be with us for a prolonged period of time.

The most likely risk to stock markets probably comes not from a sharp rise in interest rates and bond yields, but from themes that might drag down corporate earnings of stocks – and/or raise their volatility. This would reduce their attractiveness relative to bonds, creating more demand for fixed income. In this way, a diversified multi-asset portfolio is partly protected from such a shock. Would such a shock trigger a bear market for stocks? It would depend on the extent of the shock, but global stock markets are likely to be more resilient than when the credit crunch occurred in 2008, or the dot.com bubble burst in 2000 and investors had much higher bank account cash and Treasury yields to run to. The most likely scenario is that any correction will be met with a swift correction as investors tire of negative real returns from ‘safe’ assets.

What are the themes that could cause a stock market shock? The risk of nuclear war developing on the Korean peninsula is the current most highly rated risk. Other themes include the risk of a credit-crunch in China triggering a recession - with a further devaluation of the renminbi. There is also the risk of a sell-off of U.S tech stocks, as valuations begin to look stretched relative to future earnings potential.

A balanced fund 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 (i.e. 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
August 01, 2017

Investment Outlook
July 18, 2017

Investment Outlook
July 03, 2017

Investment Outlook
June 20, 2017

Investment Outlook
June 05, 2017

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