ABN AMRO Private Banking has taken profit on listed property and further increased its overweight position in European equities, according to its 2015 Investment Outlook – Moving forward in 2015 – published today. It recommends to enter the new year with an overweight in equities and hedge funds and an underweight in bonds.
Didier Duret, Chief Investment Officer of ABN AMRO Private Banking, said: ‘Low oil prices and a higher US dollar will be major tailwinds to the world recovery and earnings generation but we face a new normal for diversifying the risks. Opportunities have narrowed in the bond space and equities have become income- and return-generating assets by default’.
The private bank expects megatrends related to innovations and shareholder value to support stock returns in 2015. For portfolio diversification, it particularly favours direct investment in leading technology firms, such as Google, Kuka and Qualcomm, along with large, powerful consumer-oriented companies, such as Amazon, Alibaba, Baidu and Tencent. Also, ABN AMRO Private Banking prefers large conglomerates, such as GE, Philips, Siemens and DSM, as well as large pharmaceutical manufacturers, such as Amgen, Novartis, Gilead Sciences and Pfizer.
For the global economy, ABN AMRO Private Banking expects growth of 3.8% in 2015. Clients can prepare for possible periods of volatility and market corrections due to coming political elections and international tensions, by broadly diversifying across sectors, bond issuers and geography. Bonds are underweighted but remain, despite low yields, as a buffer against large equity corrections. To deflect interest rate and liquidity risk, ABN AMRO Private Banking recommends diversification across investment-grade, high-yield and European peripheral bonds.
Allocations in the private bank’s balanced model portfolio reflect these changes, with cash increased to 10% (from 5%). Bonds, equities and alternative investments retain weightings of 37%, 40% and 13% respectively. Within alternative investments, hedge funds are overweight at 8% with a focus on long/short equity and event-driven strategies.
In currencies, the US dollar is expected to strengthen in 2015, whereas the euro and the Japanese yen are expected to remain out of favour. Oil prices are expected to suffer from abundant supply. The fundamental outlook for most metals markets is promising.
About ABN AMRO Private Banking
ABN AMRO Private Banking is the international wealth-management division of ABN AMRO Bank with EUR 187.5 billion of total assets under management. It offers more than 100,000 high-net-worth individuals a full range of banking, investment management, financial and estate planning products and solutions. Our domestic and international offices in over 10 markets worldwide employ 3,600 professionals and include the respected private banks ABN AMRO MeesPierson in the Netherlands (Est. 1720), Bethmann Bank in Germany (Est.1712) and Neuflize OBC in France (Est. 1667). We are the third largest private bank in the Eurozone, 7th largest in Europe and enjoy a top 20 position in Asia. Visit us at www.abnamroprivatebanking.com