The group is underweight the US, partly on valuation grounds, but also because of its conviction elsewhere.
It remains underweight the UK, even though it is the domestic market for many of their clients. Summers says this is not a call on the UK, because the market is international, but simply because there are better opportunities elsewhere.
He adds: “The majority of our investments will be sterling-based, or at least think in sterling. In terms of Brexit, no-one knows what is going to happen, so we didn’t take a view on it. We don’t know whether it will be soft or hard, there simply isn’t that level of clarity. All we’ve known is that sterling would take the hit.”
He points out that for UK investors, the weakness of sterling has largely been a good thing. Although they are mindful of the situation, they are trying to look through the headlines, consult with the managers with whom they invest. To date, he says, markets have taken it in their stride.
Investec Wealth is currently running with neutral risk across its portfolios. Summers believes that synchronised growth in economic activity around the globe is offset to some extent by tighter monetary policy, adding, “while higher rates are a result of good things happening, it can unsettle markets. Volatility is very low and risk assets aren’t cheap”.
Macroeconomic risk is diminishing, but is still there. The group had identified two major geopolitical risks at the start of this year: The first was the French election, and the rise of populist parties in Europe.
This has receded with the accession of Emmanuel Macron and the apparent defeat of right wing candidates there and in the Netherlands. That said, Italy’s Five-Star movement still lurks in the background.
The second problem remains conspicuously present, notably the problems associated with North Korea and the volatility of the Trump administration.
