It is to allocate to global macro, CTA, relative value and event-driven strategies as it moves its hedge fund allocation from neutral to overweight.
In its recently published Q3 investment outlook, its allocation will remain underweight commodities and fixed income though it does like corporate bonds, Asian bonds in particular.
Government bonds, unsurprisingly, remain out of favour.
Its overweight positions are in Asian and Latin American emerging market equities, though neutral on equities overall.
The asset allocation for its balanced model portfolio – perhaps a good indication of its world view – is 30% equities, 46% bonds, 13% cash and 11% alternatives that includes hedge funds, property and private equity.
In terms of sectors, industrials and consumer staples are favourites while the bank is also leaning towards those industries it describes as “operating at the crossroads of ‘megatrends’”, that is to say industries where demand has been strong through the economic downturn.
“Risk related to the European Monetary Union has cast an overwhelmingly dark cloud over financial markets, temporarily hiding genuine value created by private companies,” says Didier Duret, chief investment officer of ABN AMRO Private Banking. “Correlated asset classes have increased the imperative to identify value investment opportunities and portfolio diversification.”
Despite the risks facing the single currency in Europe, Duret is bullish that the current euro membership will stay unchanged and global recession will be avoided.
“The possibility of a lower euro could strengthen the case for discounted European equities, with Germany, Benelux, Switzerland and Nordic countries preferred,” he adds.
