Equity change: reduce energy, increase financials and industrials

With the increase in oil prices following the sanctions on Russia, we believe energy stocks’ share prices now capitalise in most of the upside from higher energy prices. We believe the oil price has risen high enough to equilibrate demand, but with the prospect of severe and sustained lockdowns in China there is the risk of lower oil demand and falling prices, so we’re taking profits on most of our remaining energy exposure.

We’re increasing our exposure to financials. While the banking outlook is not strong, insurers are increasing premiums due to the increased costs of natural disasters, and higher interest rates will lead to higher returns on the insurance premium float. We’re using the residual capital to increase our positions in selected high quality industrial companies that are affected by short term issues that will be resolved over time. The recent falls in the prices of insurance companies indicate that the market has already factored in the impact of the east coast flooding on these stocks.

Clients who are logged in can access the updated model portfolio files and standard text from our downloads page, and will see the full details of the portfolio changes and suggestions for implementation below.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

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