Current views at a glance - November 2017
09/11/2017
Key
Equities
UK
There are concerns over ongoing economic strength in light of Brexit overhang and that the tailwind from weaker sterling may be in the past
European
We are seeing strengthening economic activity and believe equity markets are relatively undervalued, but we are expecting a pause
North American
A fuller valuation is offset by weaker USD and good earnings growth
Japanese
A better global economy is helping Japan but the domestic economy is still disappointing
Asia Pacific
The pick up in global trade is helpful to Asia Pacific
Emerging markets
Modest but synchronised global growth should be more supportive to Emerging Markets
Fixed income
Government bonds
We remain negative on GBP and euro bonds but US Treasuries are becoming more attractive given the normalisation of yields that has taken place
Investment grade
Credit spreads has provided some pick-up but we prefer short-dated bonds
High-yield
High-yield credit spreads are at a historically tight level so we would be wary of high-yield spread duration exposure
Inflation-linked
Recent gains in inflation-linked government bonds reduce their valuation attractiveness but they are still desirable from an improving economic perspective
Emerging market
Selectively, local emerging market bonds offer good interest rate and currency exposure
Alternatives
Absolute: equity
Increased volatility and 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 as 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 has defensive and opportunistic qualities in uncertain and volatile markets
Author
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.