Investment Clock insights

Multi Asset – how are we positioned?


Nersen Pillay

7 December 2017

We have been overweight stocks but underweight bonds since 2012 and remain so going into the New Year.
According to our Investment Clock model, we are not in the late cycle yet. Growth is steady and inflation is low; this makes stocks look attractive despite rising valuations. Bonds remain an underweight, given the low level of yields and the likelihood of gradually rising interest rates.
Global high yield bonds are more attractive with global growth picking up and policy loose.
Commodities provide some inflation protection in portfolios; we are currently neutral.
Equity Regions: Overweight emerging markets (EM) and Japan; underweight UK mainly
We are overweight Japan and EM as global growth beneficiaries, but have trimmed the EM position in view of weaker Chinese data. We are underweight the UK on the basis of poor earnings trends, weaker growth and Brexit uncertainty.

We have been overweight stocks but underweight bonds since 2012 and remain so going into the New Year.

According to our Investment Clock model, we are not in the late cycle yet. Growth is steady and inflation is low; this makes stocks look attractive despite rising valuations. Bonds remain an underweight, given the low level of yields and the likelihood of gradually rising interest rates. Global high yield bonds are more attractive with global growth picking up and policy loose. Commodities provide some inflation protection in portfolios; we are currently neutral.

Equity Regions: Overweight emerging markets (EM) and Japan; underweight UK mainly. We are overweight Japan and EM as global growth beneficiaries, but have trimmed the EM position in view of weaker Chinese data. We are underweight the UK on the basis of poor earnings trends, weaker growth and Brexit uncertainty.

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.