House View, June 2019

Pictet Wealth Management's latest positioning across asset classes and investment themes

Asset allocation

We have turned tactically underweight on global equities, including US equities, given elevated valuations, mixed economic data and rising trade tensions. We remain neutral on euro area equities, where valuations are generally more reasonable than in the US. We have also moved from an overweight to neutral stance on Asian emerging-market equities.

At the same time as we remain focused on quality companies rather than on speculative plays, portfolios are partially hedged against the risk of further equity market consolidation.

We remain underweight government bonds given low yields, except US Treasuries, on which we are neutral. We have shifted from an underweight stance on top-rated investment-grade US corporate bonds to a neutral one and maintain our overweight conviction on private equity.


Oil prices tiled down in the second half of May, as trade tensions came to the forefront again. We still see the risk of short-term spikes in prices, but believe Brent oil could test USD50 per barrel by the turn of the year as significant new supply comes on stream.


The Swiss franc again benefited from rising trade and political uncertainties in May. The downturn in the growth outlook should also remain supportive of the franc in the months ahead. The CHF1.15/EUR1 rate may prove a medium-term low for the franc.


A majority of US and European companies reported positive surprises at a net income level for Q1. Instead of declining, as had been feared, Q1 earnings actually rose on a year-on-year basis in the US.

However, there was a pullback in developed-market (DM) stock indices in May, largely because of increased Sino-American trade tensions. These tensions, plus valuations that remain high, have made us cautious on DM equities’ near-term prospects.

Emerging-market equities have given up their lead over DM equivalents, suffering from more negative earnings revisions. However, we still see opportunities in India and China.

In a poor month for equities overall, sectors like consumer discretionary suffered most, whereas defensive sectors like consumer staples outperformed. However, one needs to be highly selective.

Fixed income

In view of our revised expectations for policy rates, we have again cut our central year-end forecasts for the 10-year US Treasury yield (to 2.5%) and for the equivalent Bund yield (to 0.1%).

We have moved from an underweight to a neutral stance on US investment-grade credits, which we expect to outperform high-yield credits as markets grow more unsettled. The drop in Treasury yields has made us less wary about longer-dated bonds from top-quality credit issuers.

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