INVESTMENT STRATEGY – PRIVATE BANKING, 1ST QUARTER 2015
- In a low rate environment, prefer US to EUR sovereign bonds.
- Favour equities over fixed income on a valuation basis.
- Hold some alternative assets to withstand higher equity-bond correlation during potential corrective phases.
- Maintain a cautious stance on commodities.
- Overweight Asia relative to Latin America and Emerging Europe.
- Gain exposure to the US consumer and be selective in US high yield.
- Keep exposure to selected (Asian) emerging credit and local currency debt.
- As the Fed tightens, be long the US dollar and anticipate further yield curve flattening.
- Prefer European to US credit and overweight European equities, particularly high-quality cyclicals and financials.
- Seek international equity diversification in USD-based portfolios, hedging currency risk.