ABN AMRO MeesPierson cuts equity weighting

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ABN AMRO MeesPierson has reduced its equity weighting from a large to a moderate overweighting. ABN AMRO’s private bank cited projected slower growth in corporate earnings as a reason, while also factoring in a range of political and non-political uncertainties that might adversely affect the investment climate.

Ben Steinebach, Head of Investment Strategy at ABN AMRO MeesPierson, comments: “The outlook for the global economy is good and there’s no reason for gloom. That said, the global economy has now reached a more mature phase in which corporate earnings tend to grow less steeply. The political situations in Spain, Portugal and Brazil are among the uncertainties that might upset the investment climate, which is also likely to be affected by the outcome of the Brexit referendum and tensions between Greece and its debtors going forward.”

Switch between sectors

ABN AMRO MeesPierson has moved its sector preference from financial services to telecoms. It has revised its weighting of the former from neutral to underweight, as it sees the financial services sector buffeted by concerns over economic growth and central bank policies, as well as by margin pressures. Telecoms players, by contrast, have recently improved their balance sheets and offer attractive dividend yields, which ABN AMRO MeesPierson feels justifies an increase in the telecoms stake from underweight to neutral.

Real estate weighting also

Real estate has seen its weighting increase from underweight to neutral. Steinebach observes: “We expect interest rates to remain exceedingly low for an extended period, and it’s typically property investments that benefit from this. Real estate investment risks are limited, as their cash flows are predictable. In addition, at around 3.5% the asset class is currently looking at very attractive dividend yields.”

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