Monthly Investment Strategy Highlights, April 2017

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.

mish-april-_-dm-equities

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.

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