Our multi-asset investment views - June 2018


Asset classes



We have downgraded equities to neutral, reflecting our more cautious stance. We are seeing positive news on company profits less frequently and a number of upcoming political events could increase investor nervousness.


Government bonds

Bonds have become less expensive, but are not yet attractive enough, so we remain negative.



The economic environment remains supportive of commodities.



We are in the late phase of the economic cycle, plus we are seeing central banks raising interest rates. Neither of which is positive for corporate bonds.





The US continues to be the most resilient economy and we are still seeing many companies reporting better-than-expected profits.



We have downgraded Europe to neutral. It appears that Europe’s economy is slowing down. Political risk is also in focus again.



We remain neutral due in part to the uncertainty around on-going Brexit negotiations.



We have downgraded Japan to neutral. Its economy also appears to be slowing down, and there is a risk of the yen strengthening (which tends to be negative for stocks.


Pacific ex-Japan

Downgraded to neutral. Within the region, we favour Singapore – where the outlook has steadily improved – over Australia – whose economy faces challenges.


Emerging markets

We have downgraded to single positive. Valuations are relatively attractive, but trade tensions, elections and a stronger dollar prove hindrances in the near term.


Government bonds



We remain negative as they are still expensive, there has been a large increase in supply, and higher yields are available in Europe.



We have downgraded UK gilts to negative, to bring our score in line with other major markets and because of their recent outperformance.



The European Central Bank will remove a significant support for German bonds (bunds) when it starts reducing its quantitative easing programme later this year.



No change. It is still too early to downgrade this market as it looks like the central bank will continue to support the market for now.


US inflation linked

We remain positive but are becoming more cautious.


Emerging markets local

We remain neutral after last month’s downgrade, although potential risks have grown.


Investment grade (IG) corporate bonds


US IG corporate bonds

Higher borrowing costs are likely to put pressure on the sector.


European IG corporate bonds

Although the picture has improved, European investment grade corporate bonds still do not look attractively valued.


Emerging markets USD

After the recent selloff, we used the opportunity to upgrade to neutral. Valuations are still not compelling but the yields on offer are attractive.


High yield bonds



This is the best-performing market year-to-date, but we remain neutral.



Political risk in Europe, particularly related to Italy, has put pressure on the sector.





Global demand for oil remains stable, particularly from China and India, while falling Venezuelan output and upcoming sanctions against Iran remain supportive.



We remain negative on gold, which we expect to struggle in an environment of rising real yields and the stronger US dollar.


Industrial metals

Continue to look attractive against a backdrop of globally synchronised growth and a strong and stable Chinese economy.



Favourable supply/demand dynamics lead us to retain a positive view.




US dollar

We believe that temporary factors such as trade protectionism and political risk will keep the US dollar stronger than its fundamentals imply.


UK sterling

Pound sterling is still driven by Brexit newsflow and our negative view is unchanged.


Euro €

We believe that European economic activity will recover from recent weakness, with the European Central Bank announcing the end of quantitative easing this year.


Japanese yen ¥

We remain neutral. There could be some strengthening in yen’s value, but that is likely to come mainly as a result of investors using it as a hedge, rather than any fundamental reasons.


Swiss franc ₣

We continue to hold a neutral view on the Swiss franc and we don’t expect the Swiss National Bank to change its current policy.


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