Italy has spoken and now’s a good time to shift the spotlight onto your portfolio and ask yourself: how am I positioned? In the below, we outline our thoughts on positioning your portfolio for both the short-term and the long-term using Exchange Traded Products (UCITS ETFs and Exchange Traded Notes). For more detail driving our initial investment view, read our pre-reform article, 'A vote for sustained growth or more economic risk? The stakes are high for the Italian referendum'
Figure 1: ‘No’ Reform Asset Allocation Impacts
In the short term, tactical opportunities are aplenty
The message to investors is to be prepared: volatility will continue in the short term, so hedge your broad exposure in equities and think about retreating back to safe havens – like gold. We believe that a vote against Renzi’s reform would see Grillo’s Euroscepticism rising, resulting in equity markets selling off in the short term, while worsening government finances and political uncertainty should see bonds and the Euro sell off sharply.
Figure 2: Tactical allocations using our range of Boost Exchange Traded Products
And in the long run… “Dis-inflation” and “loosening” fiscal compact could see Italian bonds and equities recover over the long term. Investors may consider the following strategies:
Figure 3: Strategic allocations using our range of WisdomTree UCITS Exchange Traded Funds