Quintet private bank is counting on an accelerated global recovery in the spring and is advising its clients to increase risk in the short term. The bank is overweight equities, especially those from the US and emerging markets.
With the recovery of the global economy that has begun and the support measures of central banks and governments, the climate is favourable for investments in risk assets, according to Quintet’s Bill Street.
European government bonds
The bank has reduced its position in European government bonds because it does not expect a decent return in the category and even considers a losing money on the asset a real possibility. However, Quintet is positive about European high yield bonds.
The private bank is also adding some diversifiers to its bond portfolio. ‘In particular, we invest relatively heavily in both US nominal government bonds and Treasury Inflation Protected Securities, which offer more value as a diversified investment than European government bonds due to their higher yields.’
Gold is losing its shine
According to Street, smaller and more cyclical companies are especially attractive now that the economic recovery is about to start. This should benefit hard-hit value stocks, he believes.
Meanwhile, safe haven investments are less attractive, while the dollar continues to weaken. Gold is losing some of its shine, Street writes.
Tech for the long term
For the long term, Quintet is holding on to technology stocks, partly because growth stocks will continue to benefit from very low interest rates in the medium term. Furthermore, Quintet expects that investments such as private equity, private credit and hedge funds with multiple strategies are likely to have a positive effect on total returns.