No systemic risk at European level, a seemingly convincing revitalization of the US economy and renewed confidence in equities, these are some of the highlights that Livio Dalle, Kairos Partners Senior Portfolio Manager, believes could realistically characterize the year just begun. Now that 2013 is under the bridge, all focus has turned to what we can expect in the months ahead and how to act accordingly.
“2014 could turn out to be fairly similar to the previous year,” Dalle explained. “However, it will certainly have its own peculiarities. First and foremost, we can expect to see fewer risks in the equities component of portfolios than in bonds, which have by now reached the height of ten-year rises. Nevertheless, certain equity markets are close to historic peaks, making it wise to tread carefully.” We should take a prudent approach, but be ready to exploit the many opportunities still out there, an M.O. that, as Dalle, a member of the Kairos Partners team since last summer, notes, “certainly distinguishes the firm’s bond fund managers, who posted strong performances in the year”.
Looking at the months ahead, Dalle foresees alternative and flexible products of different volatility taking on significant weight in portfolios. “At present, the ideal asset allocation is one-third bonds, one-third equity with global allocation and one-third alternative products, which will indeed make the difference.”
These considerations by Dalle and the Kairos Partners management team are based on a global overview showing confidence in the European system’s soundness despite the upcoming elections scheduled for the spring, “while some concerns could return in 2015,” concludes Dalle.