ABN AMRO MeesPierson has decided to modify the sector preference within its overweight position in equities. The latest edition of Beleggingsvisie, the investment guide published by ABN AMRO’s private bank, announces a greater emphasis on equities in the information technology industry, at the expense of luxury consumer goods. ABN AMRO MeesPierson is shifting its position in IT from neutral to overweight. For luxury goods, the bank is adjusting the existing position from overweight to neutral.
Ben Steinebach, Head of Investment Strategy at ABN AMRO MeesPierson, explains, ‘One of the reasons behind our greater preference for IT is the continuing demand for Internet products and services. Nor is their popularity subject to economic fluctuations. At the same time, the sector is seeing increases in dividend distributions, share buybacks and M&A activity, while also benefiting from the halt in the euro’s depreciation against the dollar. The lower euro and the stagnated oil prices mean a less favourable outlook for the luxury goods sector. The demand for these goods in emerging economies is also under pressure.’
Equities to remain overweight
Despite the current uncertainties surrounding the Greek situation, ABN AMRO MeesPierson will not change its policy and instead will maintain its overweight position in equities. The principal arguments for this, ABN AMRO MeesPierson explains, are that equities continue to be attractively valued and that the outlook for the global economy is encouraging. With the outlook for Europe’s economy being more favourable – despite the recent problems in Greece – and its valuations more attractive, ABN AMRO MeesPierson will maintain its preference for European equities over those from the US. The bank will remain overweight in emerging economies too (particularly in Asia), where equities are also attractively valued.
Bonds: maximum underweight
With interest rates climbing (even by small degrees) ABN AMRO MeesPierson does not view bonds as attractive. The bank has maintained its maximum underweight position in bonds. ABN AMRO MeesPierson is investing a smaller proportion than normal in government bonds, and then only in Italian and Spanish government paper. The private bank is also investing in corporates with good credit ratings and high yields. ‘The higher risks attaching to high-yield bonds are justified, we believe, by the encouraging economic outlook and the correspondingly reduced risk of corporate bankruptcies,’ Ben Steinebach explains.