Our long-held view – being long equities and underweight fixed income, notably in the eurozone – remains in place, but we reduced our risk exposure in the past few weeks. In particular, we have made the following adjustments to our asset allocation:
- We increased our underweight in EMU government bonds, taking advantage of low German yields.
- We went short US IT stocks versus long US equities, and we took profits on our long US banks position.
- We closed our long EM equities versus US equities position, and reduced our long EM local debt exposure.
- We went long a 50/50 basket of JPY and USD versus EUR as a hedge against negative global shocks.