Investment Clock insights

Current multi asset positioning

Nersen Pillay

30 May 2018

Given the current volatility in markets caused by issues in Italy, we have slightly altered our asset allocation.

Our Investment Clock is still in its Overheat phase with global growth robust but some signs of inflation. This environment  tends to support higher commodity prices and is constructive for equities.

We remain 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 sharp Q1 market declines and have been gradually taking profits as markets recovered, sentiment normalised and concerns regarding global growth slowing increased.
We are underweight:
•         Europe (given Italian political issues impacting markets and wider Eurozone growth concerns);
•         the UK (owing to Brexit uncertainty);
•         emerging markets (which tend to struggle when the US dollar strengthens given a lot of debt is held in the currency).
In response to the political and bond market events in Italy, we have further reduced our exposure to Europe and added to the UK (as it is not part of the eurozone) and US (which has better growth than the euro area). 

We remain moderately overweight Japan which, unlike emerging markets, benefits from a stronger US dollar and we have reduced our emerging markets exposure.

Past performance is not a guide to future performance. 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.