Investment Clock insights

Current Multi Asset Positioning


Nersen Pillay

10 May 2018

We are modestly overweight equities, commodities and short duration high yield bonds in our multi asset funds, but underweight fixed income and cash. We bought equities in the sharp market declines in Q1 and have been gradually taking profits now that markets have recovered and sentiment has normalised. Another reason for taking some profits is that global growth, while still positive, appears to be decelerating, with economic reports coming in below expectations outside of the US.

Our Investment Clock is still in its overheat phase, which tends to support higher commodity prices. Inflation continues to track higher in the US, helped a by a rising oil price, and this is likely to mean further interest rate hikes from the US Federal Reserve. 

 

The combination of soggy global growth indicators and rising US rates isn’t auspicious and markets tend to be more volatile in the summer months. However, we would look to buy further dips over the summer, if sentiment gets oversold. With interest rates at or below the rate of inflation in the major economies and some central banks stepping back from tightening, we don’t think the current business expansion is near to ending. 

Past performance is no guide to the future. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.