Investment Clock insights

Current multi asset positioning


Nersen Pillay

6 June 2019

We bought consistently during the 2018 Q4 panics; ending 2018 with a significant overweight in equities. Equity markets subsequently rallied sharply and we have taken profits steadily this year, in line with our risk-controlled process. This May has seen some volatility in equity markets as concerns regarding trade wars and slowing global growth continue to be issues which can rattle markets.
As we enter June, we are modestly overweight equities. This is because, while global growth has shown some signs of weakness and trade war threats do not help, we still see a constructive growth picture; interest rates are also under less pressure to rise given a more benign inflation outlook than at the end of last year and now bond markets even expect a US rate cut this year. In the absence of trade war risks and Brexit uncertainty, we expect markets would be much more positive than they are – but these risks persist, hence our relatively cautious positioning.
Stocks: we expect continued volatility and a wide trading range.
High Yield (short duration): we are overweight global high yield with recession risk still low.
Commodities: we are modestly underweight commodities given slower global growth.
Regions: we favour relatively defensive US equities.
Currency: we are overweight the US dollar and underweight the euro; we remain neutral on sterling given Brexit uncertainty could move it either way.

We bought consistently during the 2018 Q4 panics; ending 2018 with a significant overweight in equities. Equity markets subsequently rallied sharply and we have taken profits steadily this year, in line with our risk-controlled process. This May has seen some volatility in equity markets as concerns regarding trade wars and slowing global growth continue to be issues which can rattle markets.

As we enter June, we are modestly overweight equities. This is because, while global growth has shown some signs of weakness and trade war threats do not help, we still see a constructive growth picture; interest rates are also under less pressure to rise given a more benign inflation outlook than at the end of last year and now bond markets even expect a US rate cut this year. In the absence of trade war risks and Brexit uncertainty, we expect markets would be much more positive than they are – but these risks persist, hence our relatively cautious positioning.

Stocks: we expect continued volatility and a wide trading range.

High Yield (short duration): we are overweight global high yield with recession risk still low.

Commodities: we are modestly underweight commodities given slower global growth.

Regions: we favour relatively defensive US equities.

Currency: we are overweight the US dollar and underweight the euro; we remain neutral on sterling given Brexit uncertainty could move it either way.

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 of May 2019

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.