Current views at a glance - April 2020


Asset classes



Global growth and earnings should significantly reduce due to the coronavirus in the near term, but governments' and central banks' action should become supportive.



Valuations are expensive with yields falling in all major regions. We prefer US dollar bonds to euro and sterling bonds and investment grade corporate bonds to government bonds.



Attractive diversification characteristics compared with equities and bonds. We favour gold as global central banks ease policy as well as real assets with long-dated visible revenue streams.



Cash has defensive and opportunistic qualities in uncertain and volatile markets.





UK growth outlook downgraded amid uncertainty over the impact of the coronavirus but Bank of England rate cuts and fiscal stimulus is supportive.



Spread of coronavirus in Italy and slow response from governments leads to heightened contagion fears, whilst negative interest rates and low oil prices will impact the financials and energy sectors materially.


North American

Delayed response to coronavirus outbreak and Democratic presidential nomination race adding to market volatility, but valuations the most attractive on a global basis when adjusted for profitability.



Cheap valuations offset by weak domestic demand due to coronavirus.


Asia and Emerging markets

Evidence that coronavirus is beginning to be contained within China, although not in the rest of Asia. Valuations and fundamentals look attractive in emerging markets relative to developed markets in general, although oil exporting nations under stress.





Government bonds

US Treasuries offer relatively more attractive real yields, but less so after recent rate cuts by the Federal Reserve.


Investment grade

Returns are likely to be driven largely by government bond markets, given their typically high correlation. We are mindful of increasing company leverage, but spreads have widened significantly after the recent market correction.



Energy issues aside, spreads are relatively more attractive after the recent correction. Preference for European over US high yield.



We prefer US TIPS to conventional treasuries after negative effect of oil price on US inflation expectations and reduced cost of currency hedging.


Emerging markets

Emerging market bonds offer good relative value as spreads have widened and monetary and fiscal response is supportive, although oil exporting nations are under stress.




Absolute return

We like the diversification characteristics of market-neutral strategies.


Commercial property (UK)

Ongoing concern for the UK commercial property environment.



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


Structured products

Offer attractive returns but we acknowledge the shorter-term correlation with equities.


Issued in the Channel Islands by Cazenove Capital which is part of the Schroders Group and is a trading name of Schroders (C.I.) Limited, licensed and regulated by the Guernsey Financial Services Commission for banking and investment business; and regulated by the Jersey Financial Services Commission. 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.

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