Our multi-asset investment views August 2020





We maintain our neutral view as the fundamental outlook is still weak. However, support from central banks continues to be beneficial. The two-tier market in equities will likely persist. This means we foresee that “growth/quality” stocks will likely continue to outperform those stocks classified as “value”.


Government bonds

We believe that the potential returns are limited. However, they can still serve a purpose as a counterbalance to exposure to riskier assets.



We continue to be positive on commodities and expect moderately positive returns as global economic activity returns to normal.



We remain positive on credit (corporate bonds). Central bank support and investor demand will continue to support credit markets.




We expect US stocks will continue to outperform due to central bank support and a decline in the number of Covid-19 cases.



We remain negative as Brexit is still unresolved and economic activity has been hit by the lockdown.



The strong euro and expensive valuations continue to weigh on returns. The region also lacks a catalyst to spur prices higher following the EU’s €750 billion Recovery Fund agreement.



We remain neutral. Japan is suffering from a second wave of Covid-19 which we expect will suppress gains.


Pacific ex-Japan

Although the region has been supported by fiscal and monetary policy, concerns remain about a second or third wave of Covid-19 in Australia and Hong Kong.


Emerging markets

We have upgraded to positive. The weaker US dollar is helping to create more beneficial monetary conditions in emerging markets. Cheaper valuations also supports EM equities.


Government bonds



We maintain our negative view as the 30-year bond is vulnerable to an increase in inflation expectations.



Yields and fiscal dynamics remain unattractive.



We maintain a negative view due to unattractive yields and fiscal dynamics.



Our view remains unchanged as the economy is still affected by the pandemic despite support measures.


US inflation linked bonds

Inflation expectations are returning to normal as the US economy continues to reopen.


Emerging markets local currency bonds

We maintain our positive stance to benefit from looser monetary policy in the emerging world as well as taking advantage of cheap valuations in emerging currencies.  


Investment grade credit



Valuations and economic fundamentals are less attractive despite continued central bank support.



While valuations have deteriorated, we remain positive as economic data improves and the European Central Bank continues to provide support.


Emerging markets USD

Our view remains positive as the asset class benefits from the weaker US dollar. We continue to favour higher quality corporate credit based on more attractive valuations.


High yield bonds (non-investment grade)



Fiscal and monetary stimulus continue to support the market. However, US high yield (HY) is less attractive on a valuation basis than European HY.



The market continues to be supported by stimulus programmes in the region and there is potential for further falls in yields relative to government bonds (prices rise and yields fall).





We remain positive as demand for energy is now exceeding supply as economies around the world start to reopen after lockdowns ease.



Although US dollar weakness may have added volatility to the market, gold is still a beneficiary of central bank support measures.


Industrial metals

Demand outside of China could increase with recovery funding in Europe and potential infrastructural spending plan in the US.



We expect prices, currently hovering at all-time lows, to start to recover as lockdowns ease and economic activity returns to more normal levels.




US $

We expect the US dollar to remain weak as the central bank remains committed to an extremely loose monetary policy to stimulate the economy.


UK £

The economic impact of Covid-19 together with the risk of Brexit will continue to weigh on performance.


EU €

We expect to see further growth following monetary and fiscal support measures by the European Central Bank to boost economic recovery in the eurozone.



The stimulus packages announced by the Bank of Japan continue to support the currency.


Swiss franc ₣

We remain neutral on the Swiss franc given its high valuation, whilst acknowledging its continued role as a perceived “safe haven” currency.


Source: Schroders, August 2020. The views for equities, government bonds and commodities are based on return relative to cash in local currency. The views for corporate bonds and high yield are based on credit spreads (i.e. duration-hedged). The views for currencies are relative to the US dollar, apart from the US dollar which is relative to a trade-weighted basket.

Please note any past performance mentioned is not a guide to future performance and may not be repeated. The sectors, securities, regions and countries shown are for illustrative purposes only and are not to be considered a recommendation to buy or sell.