The first couple of months of 2015 have seen some further gains among many equity markets while the fixed interest sector has broadly held its own with yields rising slightly. While in some areas, notably in the USA, fixed interest values are beginning to reflect the potential for a modest interest rate increase perhaps later this year, equities are taking comfort from the potential for both earnings growth and some modest dividend growth. March brings with it the bulk of the announcements in respect of 2014 corporate progress while continuing low inflation underwrites the likelihood that interest rate increases in the UK remain someway off. In both Japan and the Eurozone, such a move still remains well below the fairly distant horizon. Further, a recent comment made by the governor of the Bank of England suggested that in the UK rates could fall even further in the very short term if deflationary forces took serious hold. At present there is no sign of this as true deflation cannot be said to exist until such time as people put off making purchases now on the basis that they expect prices to be cheaper in say three months’ time. In respect of manufactured goods and prices generally (apart from possibly energy), this is certainly not the case.

Bringing all of this together, along with the potential for some sort of compromise between the bulk of the Eurozone on the one hand and Greece on the other, we retain our view which has been in place for some years now that an overweight position in equities represents a sensible course for investors who are happy to accept potential volatility as part of their investment strategy.