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Greece could shake up ‘benign’ environment for investors

Greece could shake up ‘benign’ environment for investors

Investors may believe they are in a ‘benign’ environment, but advisers should warn them there is plenty that could go wrong, Miton’s David Jane has said.

The manager of Miton’s multi-asset fund range said worries could include a failure in Greek negotiations or a further deterioration in the politics of the Middle East.

He said: “It seems to have been a quarter where most things went up and, so long as you had the currency issues under control, you will have made a decent return.

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“Meanwhile, all the worries of the latter part of last year faded against the background of benign economic data and the ever-present powerful force of central bank-supplied liquidity.

“But markets could be shocked by something out of the blue, suggestions being an even greater deterioration in the politics of the Middle East or a failure of Greek negotiations.”

He said although stock markets had been going steadily despite the problems, the need for portfolio diversification was crucial in case of sudden changes.

In February Standard & Poor’s cut Greece’s long-term sovereign credit rating to B- from B because of liquidity restraints on Greek banks.

However, 10-year Greek bonds have yields of 11.6 per cent compared to 1.57 per cent for 10-year UK gilts.

Adviser view

Ben Gutteridge, head of funds research for London-based Brewin Dolphin, said: “Negotiations between the Troika and Greek government on the structure of their necessary reforms are ongoing, and will no doubt lead to bouts of market volatility.”