The Big Picture: Resilience endures
Investment themes and asset class views
Despite rising energy prices and central banks becoming less dovish as a result of the war with Iran, the global economy appears resilient. We expect further declines in energy prices as the Strait of Hormuz reopens (which we foresee during Q3), and we think this will allow the global economy to accelerate. We continue to favour cyclical and riskier assets but seek diversification in real estate and low duration assets such as the more liquid parts of the private credit universe.
| Our themes | ||
|---|---|---|
| A resilient global economy favours cyclical assets | Opportunities are greater outside the US | Seeking diversification in real estate and private credit |
The global economy has so far withstood the rise in energy prices, helped by AI related investment spending. As energy prices ease, we expect a mid-cycle upswing.
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US assets, especially equities, look expensive relative to history, while many international markets offer more attractive valuations and greater sensitivity to improving global growth, in our view. Differences in policy paths and currency valuations suggest a weaker US dollar over time.
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Developed world government bonds offer limited upside as yields are likely to drift higher, in our opinion. Rather we seek diversification in real estate and the more liquid parts of private credit.
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Asset class views
We evaluate a broad set of asset classes using a consistent framework built around multiple factors including the growth of the global economy, the direction of inflation and interest rates and the shape of the yield curve, market momentum, and valuations.
Note: There is no guarantee that these views will come to pass. *This is a theoretical portfolio and is for illustrative purposes only. It does not represent an actual portfolio and is not a recommendation of any investment or trading strategy. “CLOs” is AAA collateralised loan obligations. N/A indicates asset classes that are not included in the Model Asset Allocation structure. See appendices for definitions, methodology and disclaimers. Source: Invesco Strategy & Insights.
Investment risks
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.
