Strategic Sector Selector - The consumers are coming! Are they?
Equity markets remained buoyant in the final quarter of 2020 boosted by Joe Biden winning the US presidential election and positive news about vaccines. We still think that the market faces an uphill battle in the short term as infection rates rise in many parts of the world and mobility remains highly restricted.
However, we believe that monetary policy will stay supportive in the next 12 months and expect more fiscal measures to help tide over the economy until at least the summer. We retain a balance of cyclicals and defensives in our model allocation but reshuffle them to concentrate more on consumer-related sectors and less on industrials. We raise consumer discretionary to Overweight by upgrading media, travel & leisure and consumer products & services. We finance this by downgrading retailers, chemicals and industrial goods & services, where our positions were tactical. Finally, while we retain our Overweights in food, beverage & tobacco and technology as defensive hedges, we cut healthcare to Underweight.
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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All data is as at 31 December 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.
