Asset allocation

Current views at a glance - October 2017






Less positive view given continued uncertainty over Brexit and concern over increasingly squeezed consumers



Strengthening economic activity with a relatively undervalued equity market


North American

A full valuation and reduced hope of a Trump boost



Stronger global economy and trade helps but domestic economy is still disappointing


Asia Pacific

Dollar headwinds fading and pick-up in global trade is helpful to Asia Pacific


Emerging markets

Similar to Asia Pacific, stronger earnings and less dollar pressure is positive for the region


Fixed income


Government bonds

We remain more negative on conventional sterling and euro bonds. US treasuries are relatively more attractive given rise in yields 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 government bonds remain more attractive than conventional government bonds and give protection against unexpected inflation


Emerging market

Selectively, local emerging market bonds offer good interest rate and currency exposure




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



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, as portfolio insurance and as an inflation hedge


Industrial metals

Ongoing excess supply is likely to weigh on prices for some time



Oil continues to be volatile as politics and supply concerns dominate the market





Cash does not yield much but gives opportunities in periods of weakness

This article is issued by Cazenove Capital which is part of the Schroder Group and a trading name of Schroder & Co. Limited, 12 Moorgate, London, EC2R 6DA. 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.

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Nick Georgiadis

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Simon Cooper

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