Our latest multi-asset investment views - April 2018

Multi-Asset Investments

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Asset classes



We maintain a positive view as we believe profit growth should continue to support stockmarkets, even though we are late in the economic cycle.


Government bonds

We are negative on government bonds over the medium-term because of rising inflationary pressures. Inflation is bad for bonds.



We remain positive because the economic environment is supportive and suppliers of commodities are being disciplined in how much they produce.


Corporate bonds

Valuations have improved, but we don’t see much buying support from investors into the asset class or from the underlying fundamentals.





Although valuations of US shares look high, we are increasingly seeing companies upgrade profits thanks to strong economic growth. President Trump’s tax cuts are also supportive.



We expect European economic growth to remain strong, but strike a slight note of caution on the stockmarket given the strength of the euro. The impact of currency strength on investments is explained here.



We remain neutral on UK shares, where we think there is a risk that sterling continues to strengthen. This can be negative as the majority of FTSE 100 companies generate their revenues from overseas.



We believe in Japanese companies’ higher earnings potential, but this may be delayed due to the current drag of a strong yen.


Pacific ex-Japan

We remain positive on the region as whole, but within that we are now neutral on Australia due to domestic issues facing the economy and a mixed bag of latest economic data.


Emerging markets

We still expect strong earnings growth among emerging market companies thanks to a favourable macroeconomic backdrop and a continued recovery in global trade.


Government bonds



Inflation is likely to increase and the yields on US Treasuries are expected to rise. Both factors are negative for bond prices.



We don’t think the Bank of England will raise rates as soon as people expect as economic data does not justify it. We doubt there will be an interest rate rise before November. Rate rises are negative for the price of bonds.



We are negative. We think German bonds may perform worse than the market expects, as the European Central Bank may be more aggressive regarding interest rates than many anticipate.



There are some risks, but we think the central bank will continue to support the economy so we retain a neutral view on Japanese bonds.


US inflation linked

No change to our view as valuations are still reasonably attractive. They are approaching our initial target though, so we will monitor them closely.


Emerging markets local

We remain positive on emerging market bonds denominated in local currency as there seems to be no imminent threat from inflation and EM countries still tend to be in the mid, rather than late, stage of the economic cycle.


Corporate bonds


US investment grade

We think there is unattractive risk/reward in investment grade corporate bonds and there is likely to be higher volatility.


US high yield

We think that the picture remains generally stable for those corporate bonds deemed by rating agencies as riskier than their investment grade counterparts (high yield).


Europe investment grade

This area is supported by investors’ buying and central bank policy, but risks remain.


Europe high yield

The backdrop has improved but we think valuations already reflect that fact, so we are neutral.


Emerging markets USD

We remain neutral on emerging market sovereign bonds denominated in US dollars and prefer emerging market corporate bonds.





The continued cuts in oil production ordered by OPEC (the Organization of Petroleum Exporting Countries) will limit supply and as a result support the oil price.



We remain negative on gold which is looking expensive relative to its long-term historical relationship with real interest rates.


Industrial metals

The main drivers remain supportive: a weak dollar; current supply versus demand; and the robust Chinese manufacturing purchasing managers’ index.



Agricultural commodities look set to benefit from a multitude of positive factors – the weak US dollar, favourable supply/demand dynamics and declining agricultural stockpiles.




US dollar

We still believe that a weak or stable dollar environment will persist in the medium term.


UK sterling

Brexit headwinds continue to impact the currency, although relatively cheap valuations can provide some buying opportunities.


Euro €

We expect the pace of euro strength to moderate in the coming months.


Japanese yen ¥

Concerns regarding trade wars and strong JPY, as escalation of tensions would hurt trade-sensitive Asian FX the most.


Swiss franc ₣

No change in view - we continue to expect little intervention by the Swiss National Bank.


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