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Monthly Investment Strategy Highlights, April 2017

Summary:
Pictet Wealth Management’s latest positioning in fast-evolving markets. Asset allocationThe first quarter was exceptionally strong for risk assets, and the outlook remains good for developed market (DM) equities.We remain comfortable with our overweight in developed market equities, but it would be wise not to take too much risk in the coming quarter.EM assets may offer attractive opportunities on a tactical basis.CurrenciesThe US dollar probably has only limited further upside, absent a major boost to economic growth.The Swiss franc looks set to retain its safe-haven role.EquitiesThe reflation trade is proving resilient, supported by a good earnings growth outlook.Valuations for DM equities are well above long-run averages and leave little room for disappointment.Fixed incomeWe continue to favour high yield within fixed income.US Treasuries remain important as a protection asset.AlternativesOur focus remains on opportunistic managers with a long volatility profile. At the portfolio level, we aim to keep a low beta to equities and credit.We expect private equity to continue to display attractive returns.

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Pictet Wealth Management’s latest positioning in fast-evolving markets.

 Asset allocation

  • The first quarter was exceptionally strong for risk assets, and the outlook remains good for developed market (DM) equities.
  • We remain comfortable with our overweight in developed market equities, but it would be wise not to take too much risk in the coming quarter.
  • EM assets may offer attractive opportunities on a tactical basis.

Currencies

  • The US dollar probably has only limited further upside, absent a major boost to economic growth.
  • The Swiss franc looks set to retain its safe-haven role.

Equities

  • The reflation trade is proving resilient, supported by a good earnings growth outlook.
  • Valuations for DM equities are well above long-run averages and leave little room for disappointment.

Monthly Investment Strategy Highlights, April 2017

Fixed income

  • We continue to favour high yield within fixed income.
  • US Treasuries remain important as a protection asset.

Alternatives

  • Our focus remains on opportunistic managers with a long volatility profile. At the portfolio level, we aim to keep a low beta to equities and credit.
  • We expect private equity to continue to display attractive returns.
Perspectives Pictet
“Since 1805 Pictet has remained single-minded in its mission to advise private clients, families and institutions in the art of managing their wealth.” More than 200 years after it was founded, Pictet ranks as one of Switzerland’s leading private banks and is among the most respected asset management specialists in Continental Europe. Even though we now have a worldwide presence and a global perspective, we retain the characteristics that have helped our clients to prosper over two centuries.

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