Will the bears or bulls triumph?
With the FTSE 100 index of leading UK company shares back up over the 5.000 level as we write this, investors are considering how their portfolios are positioned for the future.
Informed Choice investment director and chartered financial planner Dermott Whelan was quoted in the Guardian this week describing our House View for various investment asset classes.
Dermott Whelan of independent financial adviser Informed Choices agrees there is a lot of uncertainty across asset classes and says their recommended portfolio would actually be underweight in gilts.
“We have concerns that demand for gilts will be scarcer this year than it has been over the previous 12 months,” he says. “It was the system of quantitative easing that previously bought up much of the gilt issuance and we cannot rely on that to happen again this year, particularly with continued fears about inflation.”
That said, he suggests portfolios should be overweight in index-linked gilts while uncertainty remains about the future of UK inflation.
As for equities, Whelan suggests being overweight in European shares. “We believe that the euro will survive the current crisis, although it may remain weak for some time yet. This would be positive for European exporters, so overseas earnings should help to fund economic growth in Europe, particularly if demand is there from the growth in emerging market economies.”
He remains neutral on UK and American equities but likes the look of Asian (excluding Japan) equities because “these economies are generating growth well in excess of developed Western economies.”