4 min read 17 Jul 22
Looking ahead, we believe financial markets are likely to remain volatile as financial conditions continue to tighten and economic growth weakens. The inflation outlook remains uncertain and as such central banks are inclined to raise interest rates more quickly than in prior cycles. Market pricing of rates and inflation suggest an expectation that the Federal Reserve will follow through with its intentions to raise interest rates over the coming months but at a cost of a contraction of output. The risk for equities and bonds heading into H2 is that the expected slowdown in inflation fails to materialise while the economy continues to slow. The economic side effects of the continuing war in Ukraine on energy and commodity markets as well as the scars on supply chains left by COVID-19 provide additional complexity.
Relative to the strategic asset allocation for each portfolio, we are taking the following views:
We are neutral on equities overall. In our view, it is still too soon to position for a rebound in risk assets, as there are some risks that have not been fully priced in. We continue to monitor market moves carefully and will adjust our allocations as the economic outlook changes.
Our model portfolio service can help advisers provide their clients with a cost effective way to invest while benefiting from active management, diversification and a wide range of ESG outcomes.
Explore the latest disclosure and regulatory information around how to complain, inducements, conflict of interest, Pillar 3 and the UK Stewardship Code.