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Investment views

The Multi-Asset Indicator

18 October 2019
Author: The Multi-Asset Team

Market review

The third quarter saw the various factors that have been influencing the markets this year – accommodative central policy, US-China trade issues and signs of slowing global growth – trading places as the topic-du-jour. This led to some choppy returns and a relatively wide dispersion in performance.

This dispersion was most stark within Growth assets. Japanese equities were the best performer after the market was buoyed by a retail-led boom as consumers looked to make purchases prior to a rise in consumption tax. US equities broke new highs while European and UK equities were both boosted by respective currency weakness. Emerging market, China and Asian equities all produced negative returns due to the ongoing trade issues and US dollar strength.

Emerging market hard debt outperformed local debt given US dollar strength and specific issues in places like Argentina. It was a positive quarter for most corporate bond markets, with investment grade outperforming high yield. Listed property was the stand-out Growth asset performer, while commodities experienced a negative quarter, with oil once again experiencing a volatile period.

Among Defensive assets, government bonds had a strong quarter. Yields broke new all-time lows across most developed markets and at most maturities over August before slightly backing up in September. These moves saw US 30-year Treasury yields fall below 2% and German 10-year bund yields below -0.7%. At one point, over US$17 trillion of government bond debt was negative yielding. The US dollar strengthened against G10 and most emerging market currencies, with the Japanese yen close behind in performance. Sterling moved in sympathy with Brexit developments while the euro was negatively impacted by concerns around the strength of the economy.

Within Uncorrelated assets, gold prices continued to scale new heights given fears around slowing global growth before falling back slightly over September. Infrastructure assets were positive again, supported by falling bond yields.

At a glance - our asset class views

---o+++
Equities
North America  
Europe ex UK  
UK  
Japan  
Asia ex Japan  
Emerging markets  
---o+++
Government Bonds
North America  
Europe ex UK  
UK  
Japan  
EM Hard Currency  
EM Local Currency  
Investment Grade Corporate Bonds  
High Yield Corporate Bonds  
---o+++
Currencies
US dollar  
Euro  
Sterling  
Japanese Yen  
Asia ex Japan  
Emerging Markets  

  View for the coming 6 to 12 months* Previous quarter's view

*Views of Investec Asset Management’s Multi-Asset team and reflect preferences within respective asset class. As at 30.09.19.

Key themes for the coming 6-12 months

  • Will the US and China reach a trade compromise or will the uncertainty continue?
  • Slowing US growth – will the strength of the US consumer be enough to offset manufacturing declines?
  • Are central banks reaching the limits of monetary policy and, if so, is fiscal stimulus needed?

Read more

The Multi-Asset Team

Important information

This material is for informational purposes only and should not be construed as an offer, or solicitation of an offer, to buy or sell securities. All of the views expressed about the markets, securities or companies reflect the personal views of the individual fund manager (or team) named. While opinions stated are honestly held, they are not guarantees and should not be relied on. Investec Asset Management in the normal course of its activities as an international investment manager may already hold or intend to purchase or sell the stocks mentioned on behalf of its clients. The information or opinions provided should not be taken as specific advice on the merits of any investment decision. This content may contain statements about expected or anticipated future events and financial results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, new legislation and regulatory actions, competitive and general economic factors and conditions and the occurrence of unexpected events. Actual results may differ materially from those stated herein. All rights reserved. Issued by Investec Asset Management, issued October 2019.

The content of this page is intended for investment professionals only and should not be relied upon by anyone else

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