For professionnal investors and
a advisers only
o
Schro
S
oderrs
Multi
M -Assset In
nvesstme
ents
Monthly
M
y viewss – Marrch 201
13
Gove
ernment
Bo
onds
Equities
As
sset Class
Category
View
Investmen
nt
grade cred
dit
Hig
gh yield
Commoditties
Cash
Strategy
y
We main
ntain our view
w that equitie
es are still atttractive and that
t
valuatio
ons remain un
ndemanding.. However wee have downg
graded our
view on
n Europe to Neutral
N
and up
pgraded the U
UK.
Eq
quities
The US remains one of
o our two favo
oured marketss and we conttinue to be
positive on both large and small cap
p stocks and oon the value sector.
s
US
UK
Europe
Japan
Pacific ex
Japan
Emerging
markets
We have
e upgraded UK equities from
m neutral to poositive. The sttock market
is one off the cheapest indices globa
ally and UK coompanies stan
nd to benefit
mmodative mo
onetary
▲ from thee weakness in GBP sterling and the accom
backdro p.
We have
e downgraded
d European eq
quities to neutrral as the polittical impasse
in Italy a
and the recentt events in Cyp
prus have brouught headline risk back to
the
table
e.
While
periph
heral
Europea
an
equities stil l offer conside
erable value,
▼
the upsu
urge in politica
al uncertainty acts
a
as a barririer to unlockin
ng that value.
Despite the continuing
g strong performance of Jappanese equitie
es, we
neutral as we believe further upside is lim
mited in the sho
ort term. We
remain n
will revie
ew our stance when we can
n see if the proomised policy actions are
actually implemented..
We rema
ain neutral on Asia Pacific equities.
e
We bbelieve there are
a other
more atttractive region
nal equity mark
kets where wee prefer to hold overweight
positionss.
We also
o remain neutral on EM equiities. Althoughh the global cy
yclical
d, emerging market compannies, particularrly exporters,
position has improved
have nott been able to
o capitalise on this trend. Vaaluations on th
he other hand
are beco
oming more atttractive as em
merging markeets have lagge
ed developed
markets year to date.
Sc
chroders Mu
ulti-Asset Inve
estments
As
sset Class
Category
View
Strategy
y
We con tinue with a short
s
bias to Duration. Ou
ur views on th
he major
s are broadly unchanged in
i March.
markets
Go
overnment
bo
onds
US
We retaiin our negative view on US bonds and haave become slightly more
negative
e on 10-year Treasuries.
T
Th
his view remaiins supported by the data
coming o
out of the US and a continu
uing strong exppectation that the main
parties w
will compromis
se on tax and spending poliicies.
We main
ntain our nega
ative stance on
n Gilts, as groowth continues
s to
disappoiint and the fisc
cal position in the UK has aagain deteriora
ated.
UK
Europe
Japan
US inflationlinked bonds
EM bonds
Our neu
utral view on Ja
apanese bond
ds remains annd reflects a ba
alance
between
n negative facttors such as th
he worsening fiscal position
n and the
governm
ment’s policy of
o setting a 2%
% inflation targeet, and the po
ositive effects
of a high
h proportion off domestic ow
wnership couplled with the go
overnment’s
asset pu
urchase progra
amme.
We are n
negative on in
nflation-linked bonds, as ourr analysis suggests that
break-evven rates are expensive.
Our neu
utral view on USD-denomina
U
ated EM bondss continues. Momentum
M
ned negative and
a most coun
ntries now seeem to have rea
ached the
has turn
bottom o
of the rate-cutting cycle. Thiis means the pprospects for positive
returns h
has diminished, and yield le
evels are less attractive.
Both US
S and Europe
ean investment grade cred
dits have rece
ently
widened
d mainly due to the growing concerns on Cyprus. We
W continue
to believ
ve that the cu
urrent environment of graadual econom
mic recovery
and the search for yield will be su
upportive forr credit in botth the US
and Eurrope over the
e medium term
m. However w
we have sligh
htly cut
back ou
ur positive sc
core on valuation considerrations.
Inv
vestment
grrade credit
US
Europe
High yield
We have
e become slightly less nega
ative on Bundss, particularly on short and
medium duration bond
ds. Yields at th
he front end oof the curve ha
ave risen to
els, mainly refflecting the redduction in dem
mand for
more faiirly valued leve
these bo
onds as safe haven
h
assets.
US cred
dit spreads hav
ve widened sliightly recentlyy. Although valluation levels
expensive whe
en viewed ove
er the short-teerm, steady gro
owth and the
appear e
Fed’s po
olicy support should
s
be cred
dit friendly. Witth cash and government
bonds offfering negativ
ve real yields, the higher yieeld levels available support
the secto
or.
Europea
an credit sprea
ads have wide
ened recently oon the back of the
challeng
ging situation in Cyprus. Macro risks havee also remaine
ed a source
of conce
ern to some investors. We retain our posittive view on th
he sector as
corporatte fundamenta
als remain robust despite thhe weak growth outlook.
The US high yield se
ector has outperformed Eu
urope since the
t being of
Februarry. We still re
emain positive
e on high yieeld debt in both the US
and Eurrope. The level of carry av
vailable is stilll attractive re
elative to
the yield
ds available in
i other asset classes.
Sc
chroders Mu
ulti-Asset Inve
estments
As
sset Class
Category
US high yield
d
European
high yield
View
Strategy
y
Our pos itive view on US
U high yield bonds is retainned even thou
ugh spreads
pt grinding tighter since Feb
bruary. Investoors are still loo
oking for
have kep
carry an
nd appreciate the
t relative sta
ability that thee US economy
y is offering
ed to other reg
gions.
compare
We also
o continue to fa
avour the Euro
opean high yieeld sector in spite of mixed
macro fi gures in Europe. Additionally the relative attractiveness of this
proved verses the US. The ECB’s commitment to
sector h as slightly imp
kets if necessa
ary should conntinue to provide comfort
support financial mark
to investtors, who are still looking for extra yield.
We main
ntain our neu
utral view on the broad co
ommodity spe
ectrum.
Co
ommodities
We belie
eve that the market
m
remains
s range-boundd as supply an
nd demand
should b
be broadly balanced over the year.
Energy
Gold
Industrial
metals
Agriculture
We rema
ain positive on
n gold. A number of catalystts could push prices
higher o
over the next six
s months, inc
cluding the upccoming US bu
udget
negotiattions, and support levels hav
ve come nearrer.
Our view
w remains neg
gative over the
e medium-term
m due to a slow
wing in the
rate of C
Chinese dema
and growth and
d a large suppply response.
We rema
ain neutral on agricultural commodities. A
An underweigh
ht position
would be
e risky however as low stoc
ck levels meann that any wea
ather-related
issues ccould push pric
ces higher rap
pidly.
In an en
nvironment of persistently
p
ne
egative real raates, holding cash
c
remains
unattracctive.
Ca
ash
Sou
urce: Schroderss, March 2013.
Imp
portant Informa
ation: For profe
essional investors and adviserss only. This doc
cument is not su
uitable for privatte customers. These are the
view
ws of Schroderss’ Multi-Asset Group,
G
and may not necessarilyy represent view
ws expressed or reflected in oth er Schroders
com
mmunications, sstrategies or fun
nds. This docum
ment is intended
d to be for inform
mation purposes
s only and it is nnot intended as promotional
material in any resspect. The material is not intend
ded as an offer o
or solicitation fo
or the purchase or sale of any fifinancial instrum
ment. The
e, and should no
ot be relied on fo
or, accounting, legal or tax adv
vice, or investmeent recommendations.
material is not intended to provide
ormation herein is believed to be
b reliable but Schroder
S
Investm
ment Management Ltd (Schroders) does not w
warrant its comp
pleteness or
Info
acc
curacy. No respo
onsibility can be
e accepted for errors
e
of fact or opinion. This do
oes not exclude or restrict any dduty or liability that
t
Sch
hroders has to itts customers un
nder the Financial Services and
d Markets Act 2000 (as amende
ed from time to time) or any oth
her regulatory
sys
stem. Schroderss has expressed
d its own views and
a opinions in this document and these may change. Reliannce should not be
b placed on
the views and inforrmation in the document when taking individua
al investment an
nd/or strategic decisions.
d
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which is authoris
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A
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