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Portfolio perspectives | Video - 10:19 MIN

Asset allocation video – Downside risks to earnings, especially in Europe

Daniel MorrisMaya Bhandari
2 Authors - Portfolio perspectives
05/05/2022 · 1 Min

Expectations of persistent inflation leading to tighter central bank monetary policy are likely to continue to weigh on fixed income markets. In our view, the scope for further rises in real yields and term premia justifies a sizeable underweight position in bonds. As for equities, company earnings (excluding the energy sector) have been better than expected, but a less-than-bright outlook argues for a limited risk exposure.

Watch our video with Maya Bhandari, head of multi-asset, and chief market strategist Daniel Morris as they discuss topics including Covid-related developments in China and the – favourable – prospects for commodities. On European equities, they agree the asset class appears expensive with no end to inflation, growth and supply chain pressures in sight.


Please note that articles may contain technical language. For this reason, they may not be suitable for readers without professional investment experience. Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns. Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions). Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.

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