He said valuations in Japan were looking particularly attractive compared with the rest of the developed world, but continued concerns over China have seen the group maintain its underweight position in Asian stocks.
"We remain overweight equities as valuations are largely reasonable, although less compelling than was once the case. We also remain underweight Asian equities on concerns over China, while we are overweight Japan as valuations are attractive versus developed world peers.
"Although we remain overweight equities, it would be fair to say we are less optimistic than we have been. Having said that, the recent pick-up in M&A activity in areas such as pharmaceuticals should prove supportive."
Peripheral bonds are back
As peripheral European bonds re-entered the market, coming through the debt crisis, Portugal enjoyed a successful auction of €750m – three times oversubscribed. Greece also returned to the bond market for the first time in four years, selling €3bn of five-year bonds yielding 4.95%, with its issue said to be eight times oversubscribed.
Eurozone bonds in general gained over the month amid speculation that concerns over deflation could cause the ECB to adopt new stimulus.
Burgess said: "Within fixed income, core yields are going to grind higher, and there is much less value in credit given how far spreads have tightened."
He added only emerging market debt was offering real value in the fixed income space – with the exception of Russia, still plagued by tensions over the Ukrainian crisis – but still nervous over the risks in China, geopolitics and the macroeconomy, Threadneedle would not be increasing its weighting.
"The good news is that the current environment is likely to continue to provide opportunities for stock pickers, which we aim to exploit," Burgess added.
