The Big Picture: Eyes wide shut
Paul Jackson. Global Head of Asset Allocation Research and András Vig. Multi Asset Strategist
In the face of what we expect to be the deepest global recession in living memory (by far), equity markets are running with their eyes wide shut into what feels like a trap: they are focusing on policy support and improved economic momentum, while ignoring the earnings chasm that is opening beneath them.
We consider five economic and market scenarios. The chart below reveals a negative skew in our 12-month projected returns, more so for equities than for other cyclical assets.
If equities are obsessed with good news, gold seems to be focussed on the negative, so that within our Model Asset Allocation we prefer cash, investment grade credit (IG), high yield credit (HY) and real estate.
Regionally, we are focused on emerging market (EM), Japanese and UK assets.
For our more in-depth assessment click here.
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 may not get back the full amount invested.
Important information
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Data as at 29.05.2020, unless otherwise stated. This document is marketing material and is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell securities.
Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals, they are subject to change without notice and are not to be construed as investment advice.
