Giving the latest reading from his well-known ‘Investment Clock’ which helps guide the strategy for RLAM’s range of multi asset portfolios, Greetham said markets have rebounded strongly from their lows and economic indicators now point to a synchronised global recovery.
“Our base case is for continued equity-friendly recovery in 2016 but we have reduced exposures ahead of the volatile summer months,” he told a press briefing on Wednesday.
“We have a fundamentally positive view but go into the summer lightly positioned and will look to buy on dips,” he added.
Brexit risk
Top of the list of risks coming up over the coming months for Greetham was the British EU referendum, followed by potential shocks from China and rising concern about the Greek debt relief deal.
On the so called ‘Brexit’ vote, Greetham said it was clear the uncertainty ahead of the referendum was having an impact on economic activity across the UK. He cited recent purchasing managers’ index falls and the weakness in sterling.
Although he felt economic data could recover after the vote, Greetham said markets were likely to become volatile even if the outcome was for the UK to remain in the EU.
“Markets will react to a remain vote because the whole market is nervous about it. We think sterling will rally quite substantially,” he said.
“I wouldn’t be surprised if there is a ‘risk on’ move as well,” he said, adding his own forecast was for the UK to vote to remain in the EU.
Lonely hiker
Going into the second half of the year, Greetham said he was positioned for a scenario in which the US Federal Reserve goes it alone in raising interest rates, causing the dollar to strengthen and hurting emerging markets and commodities – a strategy he dubbed the “lone hiker”.
This means RLAM is overweight equities, especially Japanese and European stocks, along with the dollar and sterling. It is underweight government bonds, the Euro, yen and Swiss franc and neutral on commodities.
The latest ‘Investment Clock’ reading and portfolio positioning is little changed from that issued by Greetham at the start of the year when he was also positive on stocks, especially in Japan and Europe, and expected Fed rate hikes to drive dollar strength and benefit developed market stocks versus commodities and the emerging markets.
Risk ratings
Separately RLAM also announced that its new Global Multi Asset Portfolios, launched in March, have now been risk rated by Distribution Technology and will be available through its Dynamic Planner tool, a risk profiling and financial planning service.
The new portfolios are also now on three new platforms – Ascentric, Novia and Transact – with more expected to be added in coming months, the company said.
