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Bill Keen marks the end of the tax year with his investment round up of the last 12 months

The last year has been quite turbulent in terms of economic and political trends while the financial markets have become considerably more volatile, reflecting increased uncertainty.
Mixed global picture for investors
Much of the focus of investor’s attention has been on China, where slowing growth towards 6.5% caused nervousness across the globe. China’s exports fell in 2015 and the country’s reduced demand for industrial metals contributed (along with oversupply) to marked weakness in iron ore and copper prices. In addition, the Chinese actions in trying to moderate losses on the Chinese equity market and moves to devalue the Chinese currency (renminbi), further eroded confidence last summer.
By contrast, the US economy, although growing at a more sedate pace of around 2.5%, saw the unemployment rate steadily decline to 5.0%, which prompted some concerns about the Federal Reserve’s interest rate policy. Due to uncertainty in the global economy, especially in emerging markets, the first rate increase was deferred until December. It would appear that the pace of future rises will be gradual and modest, given relatively subdued inflation. An important contributor has been the significant weakness in the oil price. This has reflected global over-supply, with shale gas production and Opec’s resistance to production cuts important factors.
Europe has shown modest economic recovery in the last year, with Eurozone growth of around 1.5%. Several southern European countries have seen improved conditions, although the Greek elections and eventual debt agreement was protracted and caused nervousness. The migrant crisis developed throughout 2015, putting severe strains on relationships within the European Union.
Political landscape making an impact
Political risk has been very much to the fore in the last twelve months, with serious bomb attacks by ISIS in Paris and Brussels. With slowing demand from developing countries, the export outlook for Europe has declined somewhat since last spring. The VW diesel emission scandal has serious implications for the company and follows a sustained period of strong sales growth for the auto sector globally, helped by the availability of very competitive finance.
The UK has seen reasonable levels of economic activity, with 2.1% GDP growth achieved in 2015. Unemployment has edged lower to around 5% while real growth in wages has boosted consumer spending and helped to support expansion in services. Manufacturing had a disappointing year.  Inflation has remained well below the Bank of England target, such that rate increases may well be deferred until 2017. The domestic economy is now facing a period of uncertainty ahead of the EU Referendum vote on 23rd June. Business and consumer confidence are likely to weaken in the short term, while capital investment is delayed.
In terms of equity markets, many indices are lower than a year ago, in part reflecting a slower global economy, but also accounting for weaker earnings growth from companies, compared with earlier expectations. In the UK, oil and mining shares have been particularly impacted, but disappointing trading has also been evident in banking, retail, leisure and industrial sectors. Share ratings are however are generally at more modest levels and the market dividend yield is attractive. In a low growth, low inflation environment, many companies are looking to expand via acquisitions, and this type of corporate activity is evident in the UK and on a wider front.
The start of a new tax year is an excellent time to consider investing in a tax efficient ISA (The maximum subscription in 2016/17 is £15,240 ). Alternatively, it could also be opportune to review your existing investments.  Against an uncertain background, carefully assessing the appropriate balance between riskier and defensive assets within portfolios is of vital importance. Also, with deposit account interest rates remaining very low, identifying sustainable income generating opportunities may be required to supplement pensions.   Selectively within the UK and overseas markets there are good opportunities for accessing equity income funds, which are well established and have proved performance records.  In addition, there are several attractive income producing asset classes and a range of investments showing lower volatility levels which we have identified.   
Please get in contact with the Everys Investment Management team should you have any questions or to discuss your investment needs.
Bill Keen is a Chartered Wealth Manager.
 Bill Keen
  01404 541924

This document is issued by Everys Investment Management whose registered address is The Laurels, 46 New Street, Honiton, Devon, EX14 1BY.  Everys is authorised and regulated by the Financial Conduct Authority.
This document does not constitute investment and/or taxation advice.  Any opinion expressed in this document, whether in general or both on the performance of individual securities and in a wider economic context, represents the views of Everys Investment Management at the time of preparation.  They are subject to change.  Past performance is not a guide to future performance.  The value of an investment and any income from it can fall as well as rise as a result of market and currency fluctuations.  You may not get back the amount you originally invested.

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