Investment Strategy Paper
Download ISP - December 2010
ISP executive summary
Global growth looks like posting a 4.7% increase in calendar 2010. In developed markets the year started strongly on the back of the inventory cycle and government stimulus measures. Growth slowed as those impacts waned. At the same time, private demand wasn’t strong enough to sustain the momentum. Over the year, economic growth was strongest in emerging markets.
We expect the recovery to gather renewed momentum into 2011, with emerging markets continuing to be the strongest performers. Attempts to subdue inflation pressures as the year progresses are expected to have limited impact on output growth. We expect the US to avoid the dreaded double dip, but Europe will struggle under the weight of fiscal austerity measures. We see global GDP growth of 4% in 2011.
Our portfolios remain overweight growth assets, but we are reducing our 5% overweight to emerging markets down to 3% in our dynamic asset allocation model and look for further opportunities to reduce this position early next year. We switch into global equities to maintain our current overweight position to growth assets.
We still like growth assets, obviously, but on a risk adjusted basis the appeal of emerging markets relative to developed markets has reduced. In Australasia we continue to prefer Australian equities to NZ equities based on current valuations, and the growth and policy outlooks. We are slightly overweight commodities with the positive fundamentals of tight supply and improving demand. We remain underweight listed property, with a preference for equities within the growth mix.
The portfolios remain underweight global bonds despite the recent sell-off, as the medium-term risks to this asset class remain high in a world of rising public debt levels and valuation models continue to strongly favour equities to bonds.
Download AXA Global Investers Quarterly Investment Strategy Paper - Dec 2010
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For further information please contact:
Ralph Little, Spicers Public Relations
Telephone: 09 374 1845
Email: ralph.little@spicers.co.nz