Investment Newsletter - March 2012

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Investment Newsletter March 2012

After a storm comes a calm... It has been nice to see equity markets move higher, but what has also been reassuring is that we have now seen a period of relative stability. Apart from a wobble when concerns grew that the Greek private debt holders would not agree to accept losses, the FTSE has this year been trading in a range between around 5,850 and 5,950 for some time. This makes a nice contrast to the second half of last year where daily movements of 100 points or more were commonplace! A short pause for breath was required after such a strong start to 2012. Hopefully this will become a platform for some more gains later in the year, as we still believe equities look undervalued based on company earnings.

Portfolio Changes If you have logged onto your online accounts recently you may have seen a number of transactions. We have recently carried out some asset allocation changes, and have taken the opportunity of the relative market stability to make a few refinements to your portfolios.

Asset Allocation Changes In order to deal with last years’ market volatility, we have until recently held more cash than usual in portfolios. This was partly as a safety net and partly in case we needed to take advantage of market dips to buy additional equity. We had purchased equity trackers at market lows and had been selling them as markets rose. We have now sold the last of these holdings, the HSBC FTSE Allshare Index for most clients. This was a fund we bought in early August at a market level around 5,650, selling it on 21 February at around 5,920. The chart below shows all of the “volatility trades” we carried out since March 2011. We are pleased to say that all of these trades have now been closed at a profit:

Bought

Sold

Bought

Bought

Sold

Bought

Sold

Sold

FTSE All Share 3% 16/03/11

FTSE All Share 3% 07/07/11

FTSE All Share 3% 03/08/11

FTSE 100 Index 3% 08/08/11

FTSE 100 Index 3% 18/10/11

FTSE 100 Index 3% 25/11/11

FTSE 100 Index 3% 01/12/11

FTSE All Share 3% 21/02/12

Equilibrium Asset Management LLP (a limited liability partnership) is authorised and regulated by the Financial Services Authority. Equilibrium Asset Management is entered on the FSA register under reference 452261. The FSA regulates advice which we provide on investment and insurance business; however it does not regulate advice which we provide purely in respect of taxation matters. Copyright Equilibrium Asset Management LLP. Not to be reproduced without permission


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