Greek elections – whatever the outcome.

15th June 2012

Paul Morton, Investment Planning Director, my wealth comments “After a coalition government failed to be formed in the May elections, all eyes will be on Greece this weekend as their second attempt to form a government takes place this Sunday.

• How will markets react if SYRIZA (anti-austerity party) are voted in?
• Will Greece embrace austerity?
• Will Greece leave the Euro?

These are just some of the questions on investors’ minds and whilst we do not know the answers, what we do know is that by maintaining a diversified portfolio you are able to reduce the impact of such events.

A typical growth portfolio is invested across various asset classes such as cash, bonds and equities. Each of these asset classes is then able to be broken down further into geographies and industries. It is important to remember, what impacts one investment doesn’t necessarily impact another and a diversified portfolio is one way to mitigate risk.

Europe currently makes up 4.59% of a typical Cautious portfolio, 5.49% of a typical Balanced portfolio and 10.09% of a typical Adventurous portfolio.  European exposure is via four collective investment funds, each of which invests in companies across the continent. The pie charts below depict the spread of investments for each of the portfolios within Europe, what is notable is that within Europe we are well spread across the various individual constituents.

Whilst Greek politics may be at an uncertain cross roads, whatever the outcome, many European companies are in good shape and whilst they may well be impacted in the short term, there are many which will continue to grow earning year after year and are presenting fantastic long term investment opportunities. It should be remembered that investment in shares must be considered for the longer term to overcome short term volatility.”

Cautious – European breakdown

Balanced – European breakdown

Adventurous – European breakdown