Multi-asset portfolio allocation
Author name: Julien Lafargue, CFA, London UK, Chief Market Strategist
Barclays Private Bank discusses asset allocation views within the context of a multi-asset class portfolio. Our views elsewhere in the publication are absolute and within the context of each asset class.
Cash and short duration bonds
- Given the ongoing level of uncertainty, and to manage portfolio risks, we still prefer higher-quality and liquid opportunities.
- We see increasing opportunities in fixed income
- We still prefer developed market government bonds as a hedge against any macro volatility
- In credit, we prefer the higher-quality segment and remain selective elsewhere
- In high yield, where selection is key, our exposure is relatively low, as spreads have room to widen in an adverse scenario
- We prefer high yield and emerging market (EM) hard currency debt over EM local currency debt, considering the risk that faces their economies and currencies.
- We believe that equities remain relatively more appealing than bonds for long-term investors
- Yet, we are highly selective in our allocation
- In line with our long-term investment philosophy, portfolios remain geared towards high-quality, cash-generative and conservatively-capitalised businesses
- As a function of our bottom-up selection, we currently see more opportunities in developed market equities compared to their emerging market peers.
Alternative trading strategies (ATS)
- There are a limited number of opportunities in the ATS space, as the cost/benefit trade-off can be challenging
- Our focus is on strategies offering diversification benefits due to their low correlation to equity markets.
- As a risk-mitigating asset, gold remains the only direct commodity exposure held in portfolios
- From a portfolio management perspective, we believe that our risk budget is better spent outside of the asset class.