The Stonehouse Core Value Portfolio (CVP) had a challenging month in November with a return of -0.29%. The Investment Committee took a cautious approach and adopted a defensive positioning as we entered a period of heightened political risk due to the imminent US presidential election and Italian referendum on Senate reform; however, the Portfolio’s allocation has since been rewarded with a strong bounce back at the time of writing.

Whilst Equity markets have reacted positively to the expected economic impact of President-elect Trump’s proposed
policies in 2017 and beyond, the Investment Committee believes this leap of faith is premature. In particular, it does not seem to consider the high starting valuation levels for developed market equities and the “de-rating” effect that may come from higher bond rates if growth and inflation do indeed accelerate as expected. Equally, there is no apparent consideration of the impact of other policies such as increased trade protection and a more uncertain geopolitical outlook in the “multi-polar” world President-elect Trump seems to support.

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