Time to remain defensive

ON ASSET ALLOCATION

While many of the issues pervading through the financial system last summer are still with us today, the significant firewalls that have since been built seem to have prevented a repeat scenario of last summer's market turmoil.

Indeed, we need to remind ourselves that with the exception of Continental Europe, most major markets have actually risen very strongly in the year to date, despite the big setbacks in May and a backdrop of anaemic growth or, in some cases, recessionary conditions. To mid-August, the UK’s FTSE All Share Index had risen by almost 10% and the S&P500 by more than 13% in sterling terms; that is an encouraging result given near zero cash returns, and should help investors to make good progress against the seemingly unstoppable inflationary headwind. While recent market moves are encouragin...