SUMMARY As events have unfolded this week, both in Greece and beyond, the balance of risk and reward has altered and we believe it is prudent to reduce your stock market exposure now, and switch into lower risk funds.

As you saw from our emailed commentary this time last week, we have been working on the Government debt issue for some weeks. The gist of that note was that:

· this is serious problem, stretching far beyond Greece, which will take years to resolve, and with some distinct economic pain – there is no painless option, it is just a matter of how severe

· nonetheless, anticipating a deal last weekend to at least paper over the (Greek) cracks for now, we felt there would likely be a bit of a rally in markets

As it turned out a massive Greece rescue deal was put together which one might reasonably have expected to allow some short term stability. But the reaction of markets this week illustrates that there remains a total lack of confidence – not just to problems in Greece, but similar problems further afield.

Adding to this volatile mix, in Australia a new tax on mining companies served to highlight that taxes are going to be rising sharply across much of the globe in the years ahead, and China took further action to slow their economy. The latter particularly will put more pressure on a fragile global recovery.

Governments need some years of decent economic growth to help boost tax revenues (and reduce debt). Ordinarily if growth began to falter they might provide a fillip by cutting interest rates (but they’re already nigh on 0%) or increase Government spending (but the coffers are already empty or as good as).

Returning to now, in the short term events have turned ugly in Greece, and the reverberations are being felt globally, most obviously in equity markets (not corporate bonds).

It is important not to adjust portfolios now as an emotional, knee jerk, reaction to what we see on our TV screens.

Nonetheless the risks to the downside in many world stock markets, including the UK, are now such that they outweigh the potential upside on a 6-12 month view, and with capital preservation in mind we believe it is prudent to sell some stock market-linked funds, switching into lower risk funds which have illustrated an ability to hold steady or even move up in recent days.

For example, three funds we are now switching into are Newton Global Dynamic Bond,Standard Life Global Absolute Return, and Fidelity Moneybuilder Income

Please email andy.price@dwcifa.com with your instructions or queries, or you can go online and make fund switches. Please bear in mind that if you wish to phone we anticipate lines being very busy.

Some final notes, so you are clear.

· the three funds noted here are lower risk not no risk, and are represent one generic idea not a recommendations tailored for you;

· it is perfectly conceivable that on new news the markets can bounce sharply, after you have already switched out;

· we can’t know precisely how events will unfold, in time or scale, but feel that some emphasis on capital preservation right now is prudent;

· our concerns here do not extend to corporate bonds or the better global bond funds;

· if you make fund switches outside an ISA or pension/SIPP wrapper this might generate a capital gains tax liability, and you should be clear on whether this applies to you before you take any action