“Markets advanced again in April, the eleventh consecutive monthly rise for the FTSE 100 index. The momentum continues, following announcements of significant quantitative easing from Japan, despite no meaningful improvement in the situation in Europe or the UK, and softer data out of the US. Our perception of a lack of value in fixed income markets continues. Across all of our portfolios, we have purchased some put options as a way of allowing us to increase our equity exposure, but with some tail protection.
Markets have surged upwards, diverging from tepid economic growth, and ignoring the significant uncertainty regarding the timing of interest rate rises in the UK and the US. The current stream of positive data from the US means that we are not subscribing to the consensus view of no monetary tightening until 2015. We are disappointed that Asia has not participated in this rally as much as the West; however, we believe that while the “risk-on” mentality continues, it will broaden to Asia, eventually. Furthermore, we believe we are now closer to seeing the valuation gap between cyclical and defensive sectors start to close.”
David Coombs, Head of Multi-Manager Investments, Rathbones