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.

Twitter
Video
October 09, 2017

Explaining the Sharpe and the Information ratios
Tom Elliott

Tom Elliott, deVere Group's International Investment strategist, looks at two of the most widely used metrics in fund management for assessing performance.

Older posts

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

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

Video Archive >>

Blog
October 17, 2017

Investment Outlook
Tom Elliott

Near-term market sentiment: Still bullish. Last week the MSCI World index reached a new all-time high. It is up 15.6% in USD, and 14.3% in local currency terms. The S&P 500, FTSE 100, and DAX 30 stock market indices also saw new highs last week, while the Nikkei 225 reached a 21 year high. Morgan Stanley reported an improved risk appetite amongst investors, which was has been illustrated by outperformance on Wall Street of growth-biased small cap and cyclical stocks over defensive sectors.

The key arguments that support further stock market gains, and continued demand for higher yielding bonds, are:

  • Global GDP growth is strong. Last week the IMF upgraded its estimate of world GDP growth to 3.6% over 2016. It had been 3.2% at the start of the year.
  • This feeds through into higher corporate profits, which supports stock market valuations and company’s credit ratings.
  • Bank account cash rates and bond yields look set remain low, because low global inflation means that there is little pressure on central banks to raise interest rates by anything more than token amounts. The Fed’s unwinding of its QE program, due to start next month, will be done at a very slow pace in order not to raise bond yields.  

It is, though, undeniable that the doom-mongers have some good arguments up their sleeves:

  • Valuations on many risk assets are high by historic standards. (The bull’s response is that the argument misses the point, which is that with interest rates and bond yields low, investors have few alternatives if they are seeking income).
  • The U.S economic cycle is long in the tooth, since the current period of growth began in early 2009 and is currently the second-longest period of expansion in its history. Unemployment is low at 4.2%, which in the past has led to rising wage costs, inflation and higher interest rates. (The bull’s response: this is not a normal cycle. Low unemployment is not feeding through into higher wages, due in part to the large pool of economically inactive people that are not included in unemployment data).
  • Separatism and nationalism are on the march in much of western and eastern Europe. This represents a threat to free trade, as do the mercantilist trade policies coming from Washington and Beijing. (Bull’s response is to agree, but point out that so far Trump has not changed any existing trade arrangements and in Europe, President Macron leads an attempt across the region to liberalise economies).
  • The IMF warned last week that the global economy is weighed down by too much debt, making its health very sensitive to any rise in global interest rates or bond yields. (Bull’s response: agreement. In the downward swing of an economic cycle, those in debt become crushed by their obligations and become forced sellers of assets).

Can this bull market persist? Sooner or later this bull market will end. We may be in the last phase, which the investor John Templeton describes as ‘euphoria’, after which comes the deluge. But with no clear trigger in sight to cause a sell-off, it is premature to take risk off the table.

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 (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
October 02, 2017

Investment Outlook
September 20, 2017

Investment Outlook
September 04, 2017

Investment Outlook
August 13, 2017

Investment Outlook
August 01, 2017

Blog Archive >>