Greetham believes US 10 year government bond yields could reach as high as 5% and, as such, "are not low risk" at their current level of 3%. He also believes that interest rate sensitive sectors such as property could underperform.
The group is holding a maximum underweight position in bonds and a maximum overweight position in equities across its multi-asset portfolios, while remaining relatively negative on commodities and property. He says: "An environment of strong growth and falling inflation is bullish for equities. We last saw this situation in the 1990s and in spite of several emerging market crises, it was good for developed market equities and particularly US equities."
Greetham says that the group's 14 month overweight position in equities in the largest and longest in seven years. He believes monetary policy will stay loose under new Federal Reserve chairman Janet Yellen and elsewhere round the globe. Equally, falling US unemployment is generally bullish for equities.
Regionally, the Fidelity multi-asset portfolios are overweight in Japan and the US, while remaining underweight Europe ex UK and emerging markets. Greetham believes that recovery in Japan has been stalled by the global financial crisis and then the tsunami, but should regain momentum from here, particularly with the tailwind of Abenomics.
Greetham says China is a still in a structural slowdown: "Although Chinese business confidence has recovered somewhat, the slowdown is not good for Australia or any emerging market commodities producers. It creates stress for many emerging markets."
He is neutral on the UK, believing the country is experiencing a strong recovery, but this may not be reflected in many of the export-driven companies that make up the UK stock market. He says: "It is an old-style housing led recovery, but it may last for quite a while." He is positive on sterling and the mid-cap area.
In terms of sectors, the group is overweight consumer discretionary stocks, while being underweight consumer staples and utilities. It is positive on industrials and technology, while being negative on energy and materials.
