Global growth is picking up and stock markets have responded positively to the reflationary policies championed by U.S. President Elect Donald Trump. However, our measure of investor sentiment is in euphoric territory and we have locked in some profit by slightly reducing the overweight position in global equities, moving the money into government bonds after one of the worst months for that asset class since the 1990s. We would like to add to equities again on weakness with the erratic behaviour of a Trump administration likely to create a better entry point.
Regionally we continue to see Japan as the prime beneficiary of global growth and dollar strength. We are underweight Europe but reduced the degree of underweight ahead of the Italian referendum on the basis that political risk was already in the price after recent sharp underperformance.
We remain broadly neutral on commodities, with stronger growth in China balanced by the headwind for the asset class created by US dollar strength. We are also neutral on UK commercial property where a slowdown in the economy in 2017 is likely to be met with further fiscal stimulus as and when needed.
You can access up to date views from Trevor on the market and the movements of the Investment Clock on our Latest Investment Clock updates page.
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Directions of arrows show overall change from previous tactical change. For individual portfolio changes, please see factsheets.