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Asset allocation monthly – February 2019

Asset allocation analysis, Investment strategy

Maximilian MOLDASCHL

It’s all about growth and earnings delivery / do not expect central banks to come to the rescue / lingering downside risks leave us neutral on equities, underweight fixed income, with a tactical slant

It’s all about growth

  • We have seen a sharp re-pricing of economic growth assumptions followed by a strong rebound of risky assets.

A lot of bad news in the price?

  • Risky assets fell by more than was justified late last year.

Central banks to the rescue?

  • Hopes for support beyond the short term are misplaced.

Earnings delivery will be key

  • Earnings will have to do the heavy lifting.

Downside risks still lingering

  • Key issues such as quantitative tightening and China-US trade tensions are far from resolved.

Asset allocation

  • Strategically neutral equities – More volatility is still our base case. With risk assets sat bang in the middle of our scenario analysis range, our structural directional conviction on equities remains low. Our preferred long-term allocation is neutral.
  • Underweight fixed income – We remain underweight EMU bonds given the prospect of ECB monetary policy normalisation.
  • Aiming to be tactical – We have adopted an ever more tactical approach, most recently entering a tactical short position in equities into the recent bounce.
  • Diversifying – To build robust portfolios, we continue to hold positions and RV trades with asymmetries.


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