Strategic Sector Selector - Trying to have it both ways
Global Market Strategy Office
The swift bear market in the first quarter of 2020 gave way to a rapid rebound in equities in Q2.
We now suspect that the recession triggered by worldwide lockdowns may have been the deepest since World War II, and it may have also been the quickest. How long it will be depends on how quickly people can get back to some sort of normality. We think there is a risk of another wave of infections but also accept that a vaccine could spur rapid economic recovery. The uncertainty is the main reason why we increase our exposure in our model allocation to defensive sectors by upgrading utilities to Neutral and keep our Overweight to consumer staples. We downgrade energy and automobiles & parts after their outperformance. We keep our Overweight allocation to technology and banks to maintain exposure to both growth and value sectors.
Investment risks
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The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors.
Important information
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The opinions referenced above are those of the author as of 30 June 2020.
Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.
