The team said Barings had upped its exposure to riskier assets across the board, increasing exposure to equities and downgrading government bonds and cash.
Within equities, cyclical areas such as EM, energy, financials and industrials have been upgraded, while holdings in more defensive areas such as telecoms and consumer staples have been decreased.
Percival Stanion, head of asset allocation at Barings, said: "The recent changes to our portfolios are significant as this is the first time we have been ‘risk on’ for more than a year.
"Despite this we are not of the belief we are heading into a new bull market. This is a tactical move that may last only a matter of months, but we expect to see a sharp upward movement in markets over this timeframe.
He said the long-term refinancing operation (LTRO) enacted by the European Central Bank last year was of key significance because it removed a major element of tail risk (potential bank failure) from the system.
"It also means liquidity is likely to remain abundant and we will be watching the next LTRO allotment process in February with keen interest. Another big figure in the region of €500bn would be hugely significant.
He added that the opportunity to generate returns over the next few months could be the only one this year, as the recovery in risk assets will likely be relatively short.
