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Based on what appears to be a break in the clouds for the economy, ABN AMRO recommends that investors maintain a balanced portfolio going into 2020. The bank presents an outlook on the new investment year, in which investors are encouraged to limit their exposure to bonds, continue investing in shares, and keep a buffer in cash.
ABN AMRO has decided to increase its exposure to stocks at the expense of cash, and has now adopted a neutral stance on the asset class. Bonds remain out of favour. In terms of regions, US stocks continue to be overweight (relative to the benchmark) and European stocks underweight, although both have been reduced somewhat. A number of changes have also been made at sector level, where ABN AMRO prefers the healthcare and information technology sectors.
Despite some small, early signs pointing to possible coming improvement in the global economy, ABN AMRO continues to prefer cash over stocks and bonds. ABN AMRO reckons risks and uncertainty still dominate, such as the ongoing US/China trade dispute and China’s economic slowdown. For that reason, equities and bonds are kept at underweight.
The Dutch don’t just use Tikkie to repay their share of gifts or an evening out: ABN AMRO’s payment service is increasingly also used by people to pay their bit of shared outgoings, varying from insurance to Netflix and Spotify subscriptions. Tikkies to repay shopping expenses are the biggie, though: in the year to the end of September, 30% more Tikkie messages were marked shopping than in 2018.
In today’s uncertain investment environment, ABN AMRO favours a higher stake in cash over other assets, reflecting its earlier decision to reduce risk in its investment portfolios. A relatively large position in cash provides a measure of safety and can be used for future investments when opportunities occur. The bank is currently underweight in both equities and bonds.
ABN AMRO has taken a little more risk off the table in its investment portfolios, by slightly reducing its exposure to riskier bonds and shifting the proceeds to high-quality bonds. In terms of asset allocation, the bank remains underweight in bonds and shares, with a preference for cash.
From today, anyone with a Rabobank or SNS current account or an ICS credit card will be able to use ABN AMRO’s Grip app. Grip allows users to check their income and expenses on the go. And with the option of adding other bank accounts, the app provides a more complete picture of their finances. ABN AMRO expects to soon be able to add accounts with other Dutch banks.
Equities out of favour, commodities weighting changed to neutral
ABN AMRO has become more bullish on information technology and communications services. The bank is advising investors to increase their equity holdings in both sectors – from neutral to overweight. At the same time, ABN AMRO is downgrading its recommendation for the consumer goods sector (from neutral to underweight), as it is for the energy sector (from overweight to neutral).
ABN AMRO continues to take a cautious approach to markets owing to rising economic risks, maintaining its neutral position in equities. The bank attributed its approach to uncertainty regarding the trade dispute between the United States and China, as well as other growing political risks. Bonds are still out of favour (underweight). Within commodities, gold is preferred (overweight).
Tikkie has just achieved a new milestone: over five million Dutch people now use the ABN AMRO payment service. Nearly 200,000 Tikkie reminders are paid every day – up to 350 a minute at peak times. Also, the number of business clients for Tikkie has doubled compared with the end of last year, meaning that consumers can increasingly pay businesses and not just each other. Tikkie aims to make payments easier, faster and more fun everywhere.
ABN AMRO is pleased to announce the immediate introduction of the Home Equity Mortgage (Overwaarde Hypotheek). With this new mortgage product, homeowners who have reached state pension age (under the Dutch Algemene Ouderdomswet, or AOW) can cash out their equity without being forced to sell their homes. Unlike a normal mortgage increase, a Home Equity Mortgage does not mean higher monthly costs: the interest is simply added to the mortgage debt over the lifetime of the mortgage. Clients decide for themselves how they want to use the equity that they have cashed out.
ABN AMRO is introducing Kendu, an app offering asset management services for investments starting at 50 euros. Kendu makes working to achieve your financial goals easy. App users decide how much they want to invest; managing the assets is then handed over to experts, who invest the initial investment based on a personal risk score. Kendu is a product of ABN AMRO and available for both clients and people who do not bank with ABN AMRO.
ABN AMRO has raised its holding of European bonds that offer collateral (covered bonds) while at the same time reducing its position in American mortgage-backed securities (MBS).
ABN AMRO has announced new investment products for its advisory clients in the Netherlands. New products will include investment funds that ABN AMRO manages in partnership with other asset managers, for example ABN AMRO’s multi-manager funds. For these funds, ABN AMRO’s asset manager ABN AMRO Investment Solutions (AAIS) delegates its management function by mandating external portfolio managers specialising in the specific asset classes in which they invest. Advisory clients will also have access to more funds handled by external parties: previously, those investment products were restricted to institutional and asset management clients.
