The Big Picture: Investing in an uncertain world
Paul Jackson. Global Head of Asset Allocation Research and András Vig. Multi-Asset Strategist
Is this a buying opportunity or the half-way stage in a larger slump? The truth is we don’t know, so we have constructed a range of scenarios that see the S&P 500 anywhere between 1400 and 3000 in 12 months.
A probability-weighted approach, adjusted for the recent change in cross-asset correlations, leads to a bar-bell approach in our Model Asset Allocation that favours gold and cash among defensive assets and real estate and commodities among cyclicals. Corporate investment grade credit is favoured under all scenarios. Regionally, we now favour UK, Japanese and EM assets.
We believe that oil, sterling and real estate (REITS) are among assets that have priced in a lot of bad news.
All data as of 16 March 2020 unless stated otherwise.
