Investment Clock insights

Current multi asset positioning


Nersen Pillay 

14 February 2019

We entered Q4 2018 broadly neutral on equity markets and consistently bought during the panic at attractive levels, ending 2018 with a significant overweight in equities. Our sentiment indicator was oversold while our view on global growth was relatively constructive despite an obvious slowing. Equity markets have since rallied sharply, and in line with our risk-controlled process, we have taken profits steadily. As February ends, we have moved from an overweight equity position back down to neutral. This is partly because of the sharpness of the rally but more to do with lingering questions about global growth and potential complacency on US interest rates, trade wars and Brexit uncertainty.

Weightings may vary according to tactical asset allocation and the fund may invest outside of indicated asset classes as the manager sees fit. The views expressed are the author’s own and do not constitute investment advice. Source: RLAM. Tactical positions as at February 2019. 

Our Investment Clock model has moved quite sharply in the last year, reflecting volatility in global macroeconomic data. Growth expectations are weaker than they were a year ago, although markets have been concerned about growth for some time.
What is new is that the collapse in the oil price during the market panics means inflation expectations have weakened. 
Now, the clock is saying growth may be soggy and inflation expectations are much weaker than they were.  
This is challenging for equity markets which are not very far from previous peaks, but it is more constructive for fixed income.  
As a result, we have taken profits in equities and have overweight positioning in government bonds and short duration global high yield.

Our Investment Clock model has moved quite sharply in the last year, reflecting volatility in global macroeconomic data. Growth expectations are weaker than they were a year ago, although markets have been concerned about growth for some time.

What is new is that the collapse in the oil price during the market panics means inflation expectations have weakened. 

Now, the clock is saying growth may be soggy and inflation expectations are much weaker than they were.  

This is challenging for equity markets which are not very far from previous peaks, but it is more constructive for fixed income.  

As a result, we have taken profits in equities and have overweight positioning in government bonds and short duration global high yield.

Source: RLAM. For illustrative purposes only.

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.