In terms of equities, the group said it continues to view US stocks as secure and capable of generative positive earnings relative to their EU and emerging markets counterparts.
“The US is a medium overweight driven by its safe haven status and positive earnings momentum,” the firm said. “NN IP believes it is unlikely that European equities will outperform US equities as long as the political uncertainty lingers and the impact on the real economy cannot be assessed. This could be a prolonged period,” the firm added.
Clare Hart, fund manager of JPM US Equity Income Fund, also touted the benefits of weighting toward US equities.
“A solid US economic foundation and a brighter outlook for earnings make US equities an interesting spot for investors to collect income as they await the next leg in the markets,” she said. “The fact that absolute stock valuations in the US are at close-to-average levels – meaning equities are neither cheap nor expensive on a historical basis – is another reason to consider their relative income advantages.”
NN IP also identified real estate as an attractive investment because of its yield potential.
“Fundamental support from stronger labour and housing markets is still in place,” the group said. “There are also renewed institutional inflows into the asset class for all regions. Additional support from central banks being dovish will continue, although the Fed will eventually proceed with a rate hike.”
By contrast, the investment management group reported it had further reduced its investment in no-return assets, singling out government bonds in particular. NN IP said it has bunds as a strong underweight, compared with spread products and Euro investment grade, which it said were a medium overweight and small overweight, respectively.
Although the NN IP believes Brexit will have a substantial negative impact on the UK economy, likely resulting in a recession next year and potential headwinds for European growth momentum, they doubt it will result in a systemic crisis.
