Posted on January 11, 2018

Barclays has released its Q1 2018 “Compass” Report, which examines major asset classes globally. The report outlined how investors are being best served by leaning portfolios towards developed and emerging market equities, in addition to high yield and emerging markets bonds, while taking into consideration the importance of maintaining a well diversified long-term core investment portfolio.

The report, prepared by Barclays Private Bank, shares the latest views on the long term Strategic Asset Allocation (SAA) and highlights short term tactical adjustments recognising investment opportunities emerging from shorter-term cyclical views from across asset classes and markets across the world.

Commenting on the report, Francesco Grosoli, Barclays’ Head of Private Bank for Europe, the Middle East and Africa (EMEA), said: “The first compass report for 2018 outlines the main themes dominating investment portfolios as we look to the year ahead, where we expect stocks and equities to continue outperforming bonds in the economic cycle. Currently, no key indicators signal a major change to this outlook.” He added: “Equity markets continue to show robust growth potential in the US, Europe (ex-UK), and emerging markets, particularly the Asian markets. The report also emphasised that investments are best served in diversified long-term core portfolios with a strategic mix of assets, using professional investors providing active management on top of this allocation to achieve strong long-term returns.”

The latest edition of the Compass Research Report kept an overweight position in Developed Markets Equities. Leading indicators related to this asset class currently indicate brighter times ahead. These firming prospects for global growth and inflation are what matter for trends in corporate earnings and therefore prospective equity market returns. Emerging Markets Equities are also maintained as an overweight allocation in the moderate risk portfolio as the business cycle continues to firm up, as evidenced by business confidence surveys and trade data. Asian markets remain as the preferred region, with Korea, Taiwan and China (offshore) showing the highest conviction country bets on a strategic basis. High Yield & Emerging Markets Bonds has also maintained an overweight benchmark.

Allocation to Cash and Short-Maturity Bonds, Developed Government Bonds, Alternative Trading Strategies and Investment Grade Bonds remained underweight in the latest Compass report. The report also kept a neutral view to investments into Commodities and Real Estate.

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