Kreuzkamp said many investors are currently assessing the implications of “extreme negative scenarios” but in his view the storms could soon be followed by sunnier days.
“Although we would remain wary about emerging markets, a selective approach may offer good opportunities within the equity and corporate bond markets in the eurozone, Japan and the United States,” he said.
The CIO explained he currently has ‘nine positions’ which are unpinning his investment outlook.
These are; the global economic environment slightly deteriorates, trade expands at a lower rate, slower Chinese growth is a drag on commodity prices, oil producers’ high-yield bond prices are depressed by the low oil price, worsening US financing conditions, a broad U.S. high-yield sell-off offers opportunities, growing doubts about next US interest-rate move, and emerging markets under continued pressure.
Given all this Kreuzkamp said the asset allocation of the Deutsche AM balanced model portfolio for clients based in Europe is fixed income 49%, equities 40%, alternatives 10% and commodities 1%.
The fixed income allocation breaks down as credit 16.5%, sovereigns 21.5%, emerging markets 5.5% and cash 5.5%.
The equities element is comprised of United States shares at 18%, Europe at 13%, Japan 6% and Asia excluding Japan 3%.
The Deutsche AM team manage client assets totalling €777bn as of 31 December.