Multi-asset portfolio allocation

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 heightened level of uncertainty in financial markets, and to manage portfolio risks, we prefer higher-quality and liquid opportunities

Fixed income

• More opportunities are popping up in fixed income
• We see value in developed market government bonds and as a hedge against macro volatility
• In credit, the higher-quality segment is preferred driven by what we consider to be better relative value
• In high yield, where selection is key, our exposure is relatively low, as spreads have room to widen in an adverse scenario
• We are cautious on the emerging market segment

Equities

• Equities still appear relatively more appealing than bonds for long-term investors
• Yet, we are highly selective in allocations
• In line with our long-term investment philosophy, portfolios remain geared towards high-quality, cash-generative and conservatively capitalised businesses 
• As a function of bottom-up selection, more opportunities are seen in developed market equities compared to emerging market ones

Alternative trading strategies (ATS)

• There are a limited number of opportunities in the ATS universe, as the cost/benefit trade-off can be challenging
• Our focus is on strategies that offer diversification benefits due to their low correlation to equity markets

Commodities

• 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