ABN AMRO MeesPierson upgrades its commodities position to equal weight

Press release -

ABN AMRO MeesPierson has raised its underweight position in commodities to equal weight. In the latest edition of Beleggingsvisie ABN AMROs private bank gives profit-taking as the most important reason for this decision. ABN AMRO MeesPierson has also reduced its overweight position in real estate to equal weight. The bank’s equities position and bond portfolio remain unchanged.

Investment strategist Ralph Wessels from ABN AMRO MeesPierson explains, 'Another reason for increasing our commodities position, besides taking profits, is that ABN AMRO MeesPierson expects oil prices to continue to rise gradually until the end of the year. We also do not think that the dollar will fall much further. This outlook for the dollar is important given how many commodities are priced in dollars. As for real estate, we are reducing our overweight position to equal weight because real estate in the retail sector is suffering more and more from the rising popularity of online shopping. This investment category is also interest-sensitive, and so is more likely to be hit by any small increases in interest rates. At the same time, though, operating results in the real estate sector are still improving and dividend yields remain attractive.'

Overweight in equities

ABN AMRO MeesPierson retains its substantially overweight position in equities. The reasons for this positioning are the broad recovery of the global economy, the low and slowly rising interest rates and the double-digit growth forecasts for profits. The momentum is also positive, even though equity is already highly valued. Nevertheless, the private bank believes that equities are not yet overpriced and the current climate of low interest rates justifies a high recommendation. Europe and Asia are at present the principal drivers of the global economy, which is why ABN AMRO MeesPierson remains overweight in Europe and emerging markets. As shares in the United States are priced more highly, the bank remains underweight in US securities.

Substantially underweight in bonds

ABN AMRO MeesPierson remains substantially underweight in its bond portfolio, with a preference for corporate bonds. As a result, the private bank is also substantially underweight in government bonds, reflecting the active duration policy pursued by ABN AMRO MeesPierson. As the global economy recovers, inflation is likely to rise, drawing interest rates up and depressing bond prices. Wessels adds, 'However, interest rates fell again last month, and inflation is expected to remain low. In the US, the Fed will slow down its rate hikes. Nevertheless, the Fed is set to reduce its balance sheet, and we expect that the ECB will shortly announce plans to gradually tighten its expansive monetary policy. The gradual departure of major buyers from the market will render bond prices less buoyant.' 

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