The ratings agency Moody’s has cut the sovereign credit rating of Greece by three notches, driving it further into junk status.
Moody’s has cut the rating for Greece from B1 to Caa1. It is maintaining its negative outlook for the Greek economy at the same time.
As a result of these latest credit rating cuts, Greece now has the same credit rating as Cuba.
Looking at the broader position across the eurozone, Moody’s has warned that there is a growing danger European countries will be unable to stablise their debt positions without resorting some form of restructure.
One of the key investment themes on our radar here at Informed Choice this year is the European sovereign debt mountain.
We believe that this issue will continue to crop up at various points during the year, upsetting markets and investors, until Europe face up to the problems and take decisive action to prevent more widespread contagion.
At the start of this quarter, our Investment Committee made the tactical decision to move from an underweight to a neutral position for European Equities. Whilst we remain concerned about the sovereign debt issues, there is more evidence of self-sustaining economic growth in the region.
What we believe is important when it comes to Europe is the ability to take a selective approach to country and sector allocation within investment funds.
It is for this reason we believe a more active fund management approach is suited to Europe, as passive funds would end up with exposure to the wider region.
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