The Investment Clock

The Investment Clock is a tactical asset allocation model that Trevor Greetham, Head of Multi Asset at Royal London Asset Management (RLAM) uses to guide our tactical strategy for our Governed Range.

The RLAM Multi Asset team apply a tactical overlay to each portfolio within the Governed Range. This is a robust and repeatable monthly asset allocation process which takes shorter term market movements into account.

Our experts constantly monitor the economy to exploit these market movements and steer the Governed Range towards stronger growth by tactically adjusting the asset allocation of each portfolio, within a risk-controlled framework. This is supported by additional oversight from the Investment Advisory Committee (IAC).

If our experts decide that the mix of assets needs to be adjusted, we’ll do this automatically on your behalf – you don’t need to do anything.

Multi Asset quarterly update

How does the clock work?

The Investment Clock is a proprietary quantitative model used by the RLAM Multi Asset team to guide the tactical strategy of the Governed Range.

It relates the global business cycle to the performance of various investments. This helps the team to easily identify which stage of the business cycle we’re in and where the economy is heading in terms of global growth and global inflation. So you can have confidence that we’re taking steps to invest your clients’ money in the right asset classes, at the right time.

The clock's horizontal axis, measures inflation while its vertical axis indicates economic growth.

The economic cycle moves through waves, from prosperity to decline, with central banks inflating or deflating monetary policy as a means of stabilising activity within the economy.

The Investment Clock is useful in identifying which assets to use throughout the economic cycle, but it doesn’t identify market sentiment. That’s why the Multi Asset team also use a range of quantitative models including momentum and sentiment factors to bring science to investment decision-making and influence tactical asset allocation.

Scrutinising these models helps the Multi Asset team arrive at a view of where we are and how we need to be positioned. They also use their skill and judgment to review and analyse the data to ensure they make the right tactical decisions and share this insight with the IAC to inform the design of the Governed Range.

An example of the investment clock. This image is an infographic and has alternative text available if you are using a screen reader.

An illustration which is useful in identifying which assets to use throughout the economic cycle.

 

Source: Royal London Asset Management, for illustrative purposes only.

For more details on our systematic framework for tactical decision-making visit our active management page.

Regular investment updates

September 2022 - economic update (PDF)
The three Rs: Recessions, rate hikes and really high prices

July 2022 - strategy update (PDF)
The return of boom and burst

April 2022 - economic update (PDF)
More rate hikes, less growth