Asset allocation

Current views at a glance - October 2017

19/10/2017

KEY

Equities

 
 
 

UK

There is continued uncertainty over Brexit as well as concern over an increasing consumer squeeze

 
 

European

We are seeing strengthening economic activity and believe equity markets are relatively undervalued, but we are expecting a pause

 
 

North American

We've upgraded our rating due to the weakness in the currency and expectations of strong growth and earnings in the second half of the year

 
 

Japanese

We are seeing benefits from a stronger global economy and trade

 
 

Asia Pacific

Dollar headwinds are fading and the pick-up in global trade is helpful to Asia Pacific

 
 

Emerging markets

Stronger earnings and less dollar pressure is positive for the region

 

Fixed income

 
 
 

Government bonds

We remain negative on conventional sterling and euro bonds. US treasuries are relatively more attractive given the rise in yields we have already seen

 
 

Investment grade

Credit spreads provide some pick-up in yields but we prefer short-dated bonds

 
 

High-yield

High-yield spreads are at a historically tight level so we would be wary of high-yield spread duration exposure

 
 

Inflation-linked

Inflation-linked government bonds remain more attractive than conventional government bonds and give some protection against an inflation shock

 
 

Emerging market

Selectively, local emerging market bonds offer good interest rate and currency exposure

 

Alternatives

 
 
 

Absolute: equity

Equity market dispersion should provide opportunities

 
 

Absolute: fixed income

Lower liquidity and flatter rate profiles reduce the attractiveness of many strategies

 
 

Absolute: macro

Increased volatility across many asset classes should counter flatter rate cycles

 
 

Commercial

Post-Brexit concerns have resulted in the marking down of property but income characteristics are still attractive

 
 

Precious metals

Gold is attractive as a diversifier, portfolio insurance and an inflation hedge

 
 

Industrial metals

Ongoing excess supply is likely to weigh on prices for some time

 
 

Energy

Oil continues to be volatile as politics and supply concerns dominate the market

 

Cash

 
 
 

Cash

Cash does not yield much but gives opportunities in periods of weakness

This article is issued by Cazenove Capital which is part of the Schroder Group and a trading name of Schroder & Co. Limited, 12 Moorgate, London, EC2R 6DA. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested. This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements. All data contained within this document is sourced from Cazenove Capital unless otherwise stated.

Contact Cazenove Capital

To discuss your DFM requirements, or to find out more about our services and how we can help you, please contact:

Nick Georgiadis

Nick Georgiadis

Head of DFM Team nick.georgiadis@cazenovecapital.com
Simon Cooper

Simon Cooper

Business Development Director simon.cooper@cazenovecapital.com