It is clear that the issues that triggered market volatility in 2011 have not gone away - a sluggish global economy, a distressed banking sector, and the Euro-zone's debt crisis.
For the optimists, the global economy may provide steady returns in 2012 as it plods along. For the pessimists, some countries might slip back into recession. All are in agreement that investor returns will depend on politicians acting decisively on sovereign debt issues.
The Innes Reid investment strategy is based on diversified portfolios with exposure to many asset classes. In 2012, we do anticipate that some asset classes will perform more strongly than others. For example, despite concerns over inflation there are several issues that favour investing in UK equities:
- High levels of dividends
- A depreciation in sterling boosting exports
- Growing profits, largely on the back of demand from emerging markets
Equally, many commentators see value in bond markets due to healthy company balance sheets and low levels of defaults.
So, is there a case for changing portfolios to second guess which asset class will be best in 2012?
At Innes Reid we have never sought to follow fashion or fads. Our asset allocation investment strategy is based on designing a portfolio that meets the objectives and attitude to investment risk of each client. Within the asset allocation strategy we seek out the best funds and fund managers using a number of selection criteria, one of which being performance. This is supported by regular reviews to change investment fund managers when they no longer meet our standards, and to rebalance the portfolio. In short, we have a strategy and we stick to it.
Even if there is a bumpy ride ahead in 2012, we will maintain our structured and consistent approach to developing client portfolios, with regular monitoring and rebalancing. We believe this is approach will deliver the best results for investors in 2012 and we will not be wavering.