Investment Newsletter - March 2013

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Investment Newsletter March 2013

Spread Your Bets We are very pleased to see equity markets continue to rise, with the FTSE 100 closing above 6,500 on 11 March. Clearly this has a very beneficial effect on portfolio values and the decision to be “overweight� equity for most clients made a real difference to performance. We still believe there is value in equity markets and therefore have been generally recommending staying overweight for the time being. However, as markets continue to rise, this is making equities less attractive in general. Whilst we really like seeing higher values, the rapidly rising equity market is actually making our job more difficult!

Portfolio Construction When constructing a portfolio there is an in depth process we go through to select all the asset classes and funds we think are appropriate. At all times we must remember that, no matter how confident we are in an asset class or fund manager, we could be completely wrong! As a result, our eggs are in several baskets, trays and other containers! We might think that equities look utterly compelling value, as we did when markets were below 5,500 in 2011. We might even think there is little value is any of the other asset classes. However, we would never have put 100% of our client’s hard earned money into equities. If we had been wrong, then the results could have been disastrous. Even a mistake in timing, where we make a correct call but are way too early, could have serious consequences in the short term. What if we bought at 5,500 and markets went to 4,000 before they recovered? What would be the effect on client confidence, or the income of those who require it?

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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