This means BPI Gestao de Activos’s allocation is still the same as when we interviewed him for the Expert Investor magazine back in February: a slight overweight to equities and underweight duration in the fixed income part of the portfolio.
The only area where Borges (pictured right) has made some changes is in the managers he is using. “We changed our fund portfolio slightly, reducing our bias to growth managers,” he says. Rather ironically, this change meant his portfolio’s conviction was only reduced further.
So what would make Borges change his outlook from neutral to bullish, or bearish? “If there were clearer signals that economic growth is cranking up, especially in Europe, we could increase risk,” he concludes.
Van Nieuwenhuijzen also finds it difficult to decipher current data. Part of the reason for markets continuing to move sideways seems directionless data releases. Another part is wait-and-see in behaviour of investors in the run-up to the Brexit referendum next month in the UK. And part of the reason is the high level of uncertainty that surrounds everything, from data to policy to politics,” he says.
It might well be the case that the political distractions we’ve seen this year, ranging from Europe’s migrant crisis via Donald Trump’s rants to the Brexit question, have made us overlook the more positive trends that could drive assets up after Britain has voted to stay in the UK and Donald Trump has finally fallen into one of the many holes he has dug for himself.
However, it’s equally possible that (geo)political risks exacerbate over the course of the year. Market observers have been calling the definitive end of the equity bull market for a while, and proven wrong every time up until now. But the only certainty is that it eventually will end. With hindsight knowledge, the current market lull might simply be seen as silence before the storm.
