Asset allocation

Current views at a glance - September 2017

08/09/2017

KEY

Equities

 
 
 

UK

Concerns over ongoing economic strength in light of Brexit overhang and views that the tailwind from weaker sterling may be in the past.

 
 

European

Better economic activity with an undervalued currency and equity market.

 
 

North American

Slightly negative due to fuller valuation alongside concerns over Trump's delivery on pre-election promises.

 
 

Japanese

Better global economy is helping but the domestic economy is still disappointing.

 
 

Asia Pacific

Dollar headwinds are fading and 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 provide some pick-up but we prefer short-dated bonds.

 
 

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.

TERMS:

Spread - the difference in yield between a non-government and government fixed income security.

Duration - approximate percentage change in a price of a bond for a 1% change in yield.

Author

This document is issued by Schroders Wealth Management (US) Limited, who together with connected companies provide the services described. Schroders Wealth Management (US) Limited is authorised and regulated by the Financial Conduct Authority. Registered office at 31 Gresham Street, London EC2V 7QA. Registered number 10761882 England. Services supplied by Schroders Wealth Management (US) Limited and connected companies may be subject to value added tax (VAT). Schroders Wealth Management (US) Limited is registered for VAT in the United Kingdom (GB 243 8687 30). For the purposes of the Data Protection Act 1998, the data controller in respect of any personal data you supply is Schroders Wealth Management (US) Limited. Personal information you supply may be processed for the purposes of investment administration by the Schroders Group, which may include the transfer of data outside of the European Economic Area. Schroder & Co. Limited may also use such information for marketing activities unless you notify it otherwise in writing. For your security, communications may be recorded or monitored.

Contact the Americas Team

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

Martin Heale

Martin Heale

Portfolio Director
Telephone:
martin.heale@schroders.com
Janette Saxer

Janette Saxer

Portfolio Director
Telephone:
janette.saxer@schroders.com