The final quarter of 2019 brought significant changes in the UK with the re-election of the Conservative party as a majority government. As a result, UK assets received a boost in stock markets and the Pound made up some of the value it lost as a result of the EU referendum back in 2016.
As the prospect of a trade war between the US and China receded stock markets saw a sharp increase in values at the end of last year. We entered 2020 with tensions between the US and Iran igniting again, which has been the source of further volatility and uncertainty.We see a strong economic backdrop in most regions, even in the UK and Europe, two locations that we have had less exposure to in the recent past. We are encouraged by this and believe that the positive market conditions can continue and a recession now looks to be further away.
We have maintained a lower level of risk in our Cautious, Conservative and Balanced portfolios throughout the last year and are content to hold this more cautious view. While we do not have plans to add to risk hugely within our portfolios we can remove some of the most defensive assets that we have been holding and can move back into the areas that we have previously avoided.
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