Unlike many things in life, the method is not as important as the outcome. Active or passive? Friends or enemies? It’s time to reframe the debate and embrace the whole continuum.
Peripheral Europe has certainly been an interesting place for political observers in the past few weeks, with Spain the latest country erupting with upheaval and political changes. However, investors should view conditions in Spain more favourably than those in Italy.
Italy’s political developments have rocked both stocks and bonds. With a technical government now in charge and new elections back on the agenda, we may not have seen the end of this adjustment yet and increased market volatility is likely to persist. We may look back to the current turmoil and investor capitulation as a great buying opportunity, but for now it’s difficult to choose the best time to catch the proverbial ‘falling knife’.
Despite the worsening global risk sentiment due to the ongoing political turmoil in Italy, and a further souring of US-China trade relations, fundamentals in Asia fixed income remain strong and supportive of economic growth.
The Multi Asset team explain the thinking behind the decision to move their equity position from overweight to neutral.