Investment Comment July 2013

Developed equity markets, particularly the US and Japan, have continued to do better than emerging markets in the second quarter, and we think that trend will continue in the months ahead.

The fear of a withdrawal of quantitative easing sooner rather later led to a correction in the stockmarkets of the world last month, but Ben Bernanke has reassured markets by stating that highly accommodative monetary policy will be required for the foreseeable future. Mark Carney, the new Governor of the Bank of England, has said that interest rates will not rise as soon as some expected. The result has been a rebound in the stockmarket.

There are signs of an upturn in some cyclical sectors, such as shipping, where the worst may be over as freight rates show signs of improving.  Company results continue to be mostly positive, with strong trading statements recently from Kier, in the building sector, and Associated British Foods, which owns Primark.

Overall, we continue to think the bull market in equities has further to go, and we think commercial property is beginning to benefit from the recovery.  The fear of rising interest rates has receded somewhat, but we remain cautious about fixed interest investments.

As always, it is important to have a balanced portfolio, invested in all the major asset classes, in line with your objectives and attitude to investment risk.  Any changes in asset allocation should be gradual, because of the difficulty with precisely timing the markets.

Risk warnings
This document has been prepared based on our understanding of current UK law and HM Revenue and Customs practice, both of which may be the subject of change in the future. The opinions expressed herein are those of Cantab Asset Management Ltd and should not be construed as investment advice. Cantab Asset Management Ltd is authorised and regulated by the Financial Conduct Authority. As with all equity-based and bond-based investments, the value and the income therefrom can fall as well as rise and you may not get back all the money that you invested. The value of overseas securities will be influenced by the exchange rate used to convert these to sterling. Investments in stocks and shares should therefore be viewed as a medium to long-term investment. Past performance is not a guide to the future. It is important to note that in selecting ESG investments, a screening out process has taken place which eliminates many investments potentially providing good financial returns. By reducing the universe of possible investments, the investment performance of ESG portfolios might be less than that potentially produced by selecting from the larger unscreened universe.