Asset Allocation

Asset Allocation Update

Asset Allocation Update

Just how undervalued is the UK stock market?

Although the valuation of the MSCI UK Index has become even more attractive compared to those of the MSCI USA Index and MSCI EMU Index since the outbreak of COVID-19, this is partly due to its sector composition. Even so, we remain of the view that it will outperform them as the rotation trade resumes.

14 May 2021

Asset Allocation Update

Taking stock of risky asset valuations

In this Update, we take a look at the valuations of a broad range of the “risky” assets that we cover on our Asset Allocation service. We think that six key points stand out.

14 May 2021

Asset Allocation Update

The S&P 500 vs the US economy revisited

Some of the policy proposals set out by the Biden administration in recent weeks add weight to our view that the S&P 500 will rise more slowly than US nominal GDP in the coming years – in contrast to the pattern of the last decade and much of the period since the 1980s.

4 May 2021
Latest Publications

Asset Allocation Update

We think that commodities & US equities will diverge

While commodities and US equities often move in the same direction, this is not always the case. We expect poor returns from commodities over the next few years, but reasonable returns from US equities.

29 April 2021

Asset Allocation Update

Another look at the valuation of the US stock market

Although the valuation of the US stock market is now approaching its peak during the dot com bubble, we doubt that it will reach such giddy heights. This reflects our forecast for a renewed rise in long-dated TIPS yields and judgement that US corporate credit spreads no longer have much room to fall.

28 April 2021

Asset Allocation Update

An unusual economic recovery for corporate bonds

Although we forecast that the global economy will grow this year at its fastest pace for almost half a century, we doubt “risky” corporate bonds will outperform “safe” government bonds by anything like as much as they have done since Q2 of last year.

26 April 2021

Asset Allocation Update

EPS, valuations & sector rotation

Given the outlook for corporate earnings and Treasuries, we don't expect the recent partial unwinding of the rotation trade in the US stock market to last. On the contrary, we expect the rotation to resume.

22 April 2021

Asset Allocation Update

Biden's tax reforms: further fuel for the rotation trade?

If enacted, President Joe Biden's corporate tax reforms could become a significant drag on US equities and hit the earnings of technology, pharmaceuticals and biotech companies particularly hard. However, political wrangling could mean the changes eventually made are quite different to the current proposals.

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