Deutsche Bank – Synthetic Equity & Index Strategy – Global A balanced approach high on equities in Q1
The Flow Whisperer – TAARSS says prefer a balanced approach high on equities in Q1
06 January 2016 (23 pages/ 885 kb)
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Tactical Asset Allocation Relative Strength Signal (TAARSS) Monthly Update
Top recommendations for January: US Broad, DM Global Regional, US Technology and Telecom, and EM Asia equities.
Global equities present the best investment support going into Q1
We recommend a balanced approach for Q1 preferring equities over fixed income, while avoiding commodities (Figure 1). Last quarter’s equity trend suggests a more positive investor sentiment towards risk assets, while the less consistent trend in fixed income suggest that investors have mixed views. Within fixed income we prefer the belly of the curve in Q1.
Tactical positioning for January based on TAARSS
- For Global Equities continue to prefer positions in US, and DM equities; while adding some EM exposure
- For US equity exposure prefer broad market cap exposure with a tilt to domestic cyclical sectors such as Tech and Telecom.
- For Intl DM equities prefer global regional allocations (e.g. EAFE-like) instead of other sub regions or country exposures. Stay neutral to Europe, and away from Asia Pac.
- For EM equities we see some level of support, particularly in Asia. We prefer regional Asia exposures over Latin America or single country allocations.
- In Fixed Income, prefer IG credit over rates or HY credit.