Posted on August 08, 2017

Barclays’ Private Bank released its Q3 2017 “Compass” Report, which examines major asset classes globally. The latest research report revealed that equities in Developed and Emerging Markets continue to offer best growth potential for investors seeking to take advantage of tactical investment opportunities across the globe.

The Q3 tactical allocation highlighted in Barclays’ latest edition of the Compass Research Report maintained an overweight position in Developed Markets Equities especially with leading indicators, related to this asset class, currently painting a positive picture for the future. Barclays’ strategists believe that both US and European stock markets (excluding the UK) are currently seen to offer superior growth potential for investors.

The report also maintained its overweight allocation to Emerging Markets Equities as the business cycle continues to firm up; a view which is supported by the stabilisation of business confidence surveys and trade data. Korea, Taiwan and China (offshore) maintain their positions as markets of choice. As a result, Barclays’ Investment Committee lowered its allocation to Cash and Short-Maturity Bonds from neutral to underweight. Similarly, High Yield & Emerging Markets Bonds allocation also remained overweight. Although relatively expensive, Barclays’ strategists continue to view High Yield Bonds as attractive in the context of a fixed income complex within a moderate risk portfolio. 

Commenting on the report, Francesco Grosoli (pictured), Barclays’ Head of Private Bank for Europe, the Middle East and Africa (EMEA), said: “While the outlook for the global economy continues to improve, as indicated by corporate earnings and trade statistics, investors are best served by continuing to diversify their portfolios across both asset classes and geographies.” He added: “Emerging Markets Equities in general continue to show robust growth potential; however, it’s worth highlighting the notable change in EM equity indices which are witnessing a shift from the energy and materials sectors to the information technology sector.”

‘Compass’ also assigned an underweight allocation to both Developed Government Bonds and Investment Grade Bonds, given that nominal yields offered by large chunks of the government bond universe as well as investment grade corporate bonds are still negligible. Additionally, the report maintained its neutral view on Commodities, indicating that investors are more likely to benefit from tilting their investments towards oil and shying away from gold, as it continues to be susceptible to further US interest rate hikes. The latest instalment of the report has also maintained its neutral allocation to both Real Estate and Alternative Trading Strategies.  

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