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Three wealth managers reveal their top Q4 calls

A trio of wealth managers reveal where they think the best opportunities lie in the final few months of the year.

Matthew Singleton

Head of investment, Raymond James, Manchester

‘I believe the final quarter of 2018 could be the most challenging quarter of this year.

‘With the potential for the Bank of England increasing the base rate, the daily reality TV show that is American politics, instability in the UK government and Brexit negotiations making no progress, I think we could see the first 5% “market correction” since Q1 2016, which we would see as a buying opportunity.

‘Our conviction is we are still pro equities with a strong focus on individual UK equities, with strong yields which are well covered by free cashflow, which have been undervalued by the market.

‘Another area that we will be keeping a close eye on is the volatility of sterling versus the dollar and euro. Getting the currency exposure of the portfolio correct will be the difference between positive and negative performance over the coming couple of years while we negotiate our exit from the EU.’

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Matthew Singleton

Head of investment, Raymond James, Manchester

‘I believe the final quarter of 2018 could be the most challenging quarter of this year.

‘With the potential for the Bank of England increasing the base rate, the daily reality TV show that is American politics, instability in the UK government and Brexit negotiations making no progress, I think we could see the first 5% “market correction” since Q1 2016, which we would see as a buying opportunity.

‘Our conviction is we are still pro equities with a strong focus on individual UK equities, with strong yields which are well covered by free cashflow, which have been undervalued by the market.

‘Another area that we will be keeping a close eye on is the volatility of sterling versus the dollar and euro. Getting the currency exposure of the portfolio correct will be the difference between positive and negative performance over the coming couple of years while we negotiate our exit from the EU.’

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John Leiper

Senior portfolio manager, Tavistock Wealth, Bracknell

‘We are underweight bonds and overweight equities going into the fourth quarter. Known as the reflation trade, it’s a theme that has played out successfully over the year and continues to gain momentum.

‘The return of inflation and synchronised growth are the driving forces supporting our view. Changes in US fiscal and monetary policies are leading the way and last week the White House announced proposals on US tax reform, including a corporate tax cut from 35% to 20%. This shift in fiscal policy will boost US corporate earnings and equity valuations, which will extend the bull market well into next year.

‘The Federal Reserve has begun to unwind its QE programme and indicated that it will raise rates in December and at least three times in 2018. Strangely, the market is less hawkish than Fed officials, but history suggests that it’s never wise to “fight the Fed”.’

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Wayne Berry

Investment manager, Brewin Dolphin, London

‘Given all of the uncertainty right now, I expect markets to remain volatile. We have increased (and continue to increase) our exposure to equities with a more overseas bias.

‘On a sector specific note, some financials and insurers as well as some of the more defensive stocks, such as tobacco, are pricing in a negative outlook and look attractive.

‘For those with a lower risk appetite, adding to short-dated bonds would be our preferred route. With interest rates on an upward trajectory, receiving an attractive income but with lower sensitivity to rate increases makes more sense.

‘Income will be the main driver of returns for the coming months and we believe there are still attractive opportunities out there in both the UK and overseas.’

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