Presentation on theme: "Global investment committee decisions Research & Strategy ABN AMRO Private Banking 16 August 2012."— Presentation transcript:
global investment committee decisions Research & Strategy ABN AMRO Private Banking 16 August 2012
Strategy review The muddling-through scenario that ABN AMRO adopted quite some time ago is still very valid. Its major implications are that the eurozone is moving slowly but surely to a final resolution of its sovereign debt crisis, thereby forcing the global economy into a softer patch. There were two important developments in the last few months that have impacted financial markets noticeably: 1.The EU Summit of end of June resulted in a number of decisions with substance: The EFSF / ESM rescue funds were granted permission to provide direct financial support to banks. The setup of a eurozone banking supervision framework was agreed as well as the funding of a growth agenda. 2.The ECB has indicated a conditional bond buying willingness that has the potential to exceed by far the size of earlier programs. Both developments provide mechanisms to reduce uncertainty.
Global Investment Committee decisions: 16 August 2012 The decision was taken to move Real Estate from Neutral to Overweight in our model portfolio, from 3 to 5%, at the expense of Cash. Rationale: The slow growth / low interest rates environment is extremely beneficial to real estate. The listed property sector in Asia is by far the best performing asset class so far in In general, the sector is supported by modest valuations and its attractive and stable yields from quality investments. As we assume that interest rates will not go up much and that growth will remain subdued for some time, conditions could remain very positive. Regional differences are substantial, leading to quite different valuations and expectations across the globe. Quality stocks and premium locations are recommended, in the belief that slippage of yields will largely be avoided in those parts of the market. We recommend to increase the allocation into property from a Neutral into an Overweight position, while maintaining a regional preference for the US (Overweight) against a Neutral for Asia and an Underweight for Europe. Risks to this position include a substantial rise in interest rates, a collapse in stock markets, and/or a strong cyclical recovery in the world that would lead to underperformance of property vis-a-vis other asset classes. All other allocations remain unchanged.
Latest ABN AMRO asset class recommendations 16 August Equities Neutral Bonds Underweight Alternatives Overweight: - Overweight Hedge Funds - Overweight Real Estate - Underweight Commodities Source: ABN AMRO Private Banking Healthcare Overweight Industrials Overweight Consumer Staples Neutral Basic Materials Neutral Energy Neutral Information Technology Neutral Consumer Discretionary Neutral Utilities Neutral Telecommunications Underweight Financials Underweight Emerging Markets Asia Pacific Overweight Emerging Markets Latin America Overweight North America Neutral Europe Neutral Developed Markets Asia (ex Japan) Neutral Eastern Europe, Middle East and Africa Neutral Japan Underweight Equity allocation « Neutral » Sector Region Bond allocation « Underweight » Asset class recommendation
Asset allocation of our model portfolios16 August 2012 Asset allocation of model portfolios showing USD and EUR risk profiles in % (adjusted on 16 August 2012) Asset allocationIIIIII Asset classStrategicTacticalDeviationStrategicTacticalDeviationStrategicTacticalDeviation Money markets Bonds* Equity markets Alternative investments Funds of hedge funds Real estate Commodities Total (%)**100 Asset allocationIVVVI Asset classStrategicTacticalDeviationStrategicTacticalDeviationStrategicTacticalDeviation Money markets Bonds* Equity markets Alternative investments Funds of hedge funds Real estate Commodities Total (%)**100 * Recommended duration: Neutral. Benchmark: Bank of America, Merrill Lynch Government Bonds 1 – 10 years. ** Foreign exchange exposure; only equity markets and a small portion of alternative investments are exposed to foreign currencies.