Current views at a glance - October 2017
18/10/2017
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
Author
This article is issued by Cazenove Capital which is part of the Schroder Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. 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.