Investment Clock insights

Current multi asset positioning


Nersen Pillay 

12 July 2019

• Stocks: we expect continued volatility and a wide trading range but stocks are supported by positive global growth and falling interest rates.
• 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, but see upside potential for oil given Middle East tensions.
• Regions: we favour relatively defensive US equities and are underweight Japan where the economy remains sluggish.
• 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 ended 2018 with a significant overweight in equities having bought in Q4 weakness. Equity markets subsequently rallied sharply and we have taken some profits this year, in line with our risk-controlled process. Volatility in May, based on concerns regarding trade wars and slowing global growth, gave us another opportunity to buy equities on weakness - stocks have since risen to record-high levels.

As we enter July, we are moderately overweight equities because trade war threats have abated, we still see a constructive global growth picture and inflation is now weak, meaning interest rates are now expected to fall in the US and the European Central Bank (ECB) is open to easier policy too. Without trade war risks, US-Iran tensions and Brexit uncertainty, we think equity markets could be much more positive than they are – but risks remain and we are in the traditionally choppier summer months now.

 

• Stocks: we expect continued volatility and a wide trading range but stocks are supported by positive global growth and falling interest rates.

 

• 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, but see upside potential for oil given Middle East tensions.

 

• Regions: we favour relatively defensive US equities and are underweight Japan where the economy remains sluggish.

 

• 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 June 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.