ABN AMRO MeesPierson is increasing its exposure to equities by 5% at the expense of liquidity. Of those equities, 3% are intended to compensate for the lower position as a result of lower share prices. In addition, ABN AMRO’s private bank is increasing its tactical position by 2%, as the bank is confident in the recovery of equity markets.
Annemijn Fokkelman, Head of Equities at ABN AMRO MeesPierson, says, “Equity prices worldwide have fallen too far. Granted, there are a few weak regions, but the economic outlook in many areas is better than share prices currently reflect. That’s why we’ve decided to increase our exposure to equities at the expense of liquidity.”
Preference for European equities
ABN AMRO MeesPierson maintains a neutral weighting in more developed and emerging markets. In developed regions, the private bank is maintaining an overweight in European equities, an equal underweight in the US and a neutral weighting for developed countries in Asia (including Japan). ABN AMRO MeesPierson is retaining a preference for emerging Asian markets at the expense of Latin American and Eastern European countries.
Heavily underweight in bonds
Given the slightly weaker projected growth of the world economy, bond yields will rise less strongly than previously thought. Yet ABN AMRO MeesPierson believes the climate for bonds will remain poor. Fokkelman says, “We expect ten-year yields on US government bonds to rise to 2.2% in the second half of 2016, as opposed to the current 1.8%. The eurozone will see only a limited rise, to 0.5%, compared to 0.3% now. Interest rates are also very low at the moment. Given all these factors, we’re heavily underweight in bonds.”