Asset Allocation

Expensive US growth stocks need not suffer from reflation and rising interest rates. On the contrary, they will thrive thanks to their pricing power, says Ton Wijsman, senior portfolio manager at AllianceBernstein and former director at W.P. Stewart.

Carmignac says all lights are green for an investment in emerging markets. The weakening dollar and the rapid recovery of economies mean increasing your allocation to EM equities and bonds is a must.

When Tesla’s annual report was released on Monday, it stated that the firm had bought $1.5 billion in bitcoin and that it wants to expand this position. This seems a strange move for an electric car producer, but Elon Musk regularly tweets about bitcoin and the digital currency dogecoin.

The UK equity market has been underperforming ever since the Brexit year of 2016. Now that Brexit is finally behind us, is this the moment for the asset class to shine again?

Strong inflows into clean energy ETFs have pushed valuations of the various subsectors higher. To mitigate downside risks, a broader perspective on the sustainability theme is needed. Semiconductor manufacturers in particular are interesting, says Thiemo Lang, manager of the RobecoSAM Smart Energy Fund.

The share prices of European banks have been rising in recent months, and their rally has further to go. In the long term though, structural underperformance will continue, believes Jonathan Fearon (pictured), investment director European Equities at Aberdeen Standard Investments.

The reflation trade will accelerate further under a Biden presidency, according to what Philippe Gijsels (photo), chief strategist at BNP Paribas Fortis. Commodities, EM equities, small caps and cyclicals all offer exposure to it. But that does not mean one should dump growth stocks.

Despite its recent slide, the US dollar is still overvalued. In time, the greenback could go much lower. This has positive implications for European, Japanese and EM equities, but is a bad prospect for Wall Street, according to Michael Devereux, multi-asset fund manager at Schroders.

In the aftermath of the surprise Democrat win in the Georgia Senate run-offs earlier this month, 10-year Treasury yield surged above the 1%-mark. It seemed investors were anticipating a large fiscal stimulus by the incoming Biden administration. But Nick Maroutsos, head of global bonds at Janus Henderson Investors, does not believe rates will go up much further from here.

Thematic ETFs saw record inflows of €9.5 billion last year, as totale assets in the category almost tripled to €22.7 billion, according to Morningstar’s European Thematic Roundup 2020.