Percival Stanion, Head of the Global Multi Asset Group at Barings said: “In this environment, we believe it is still correct to have a bias in favour of risk assets such as equities given that we are in the early stages of recovery where monetary policy is still supportive of growth in most regions. We still like US, Japanese and UK equities and the recent sharp movements in markets has offered the opportunity to selectively add to our holdings in these markets.
“Monetary policy remains hugely supportive in the latter two countries, even if it is less so in the US. UK and Japanese exporters should also continue to benefit from the relative weakness of their respective currencies, while the UK equity market enjoys strong exposure to a resilient US economy.”
"In terms of other asset classes, we recognise that the recent rise in US Treasury yields offers a potential short-term tactical opportunity in fixed income and holdings in this area are likely to increase soon. US government bonds are also viewed as a modest insurance policy on the Federal Reserve being overly optimistic about growth in the US economy.
Elsewhere, Barings has also reallocated to Australian government bonds – using investment grade credit as a source of funds – as its reasserts its hedge against poorer Chinese growth within the portfolio.
