19/10/2016
Pictet AM cuts exposure to equities to 'neutral'
In its barometer for the month of October, Pictet AM indicates that it has lowered exposure to global equities from “underweight” to “neutral.” The reasons cited by the asset management firm include intensification of political and economic risks with the approach of US presidential elections, turbulence in the European banking sector, a referendum in Italy and the prospect of an interest rate increase by the US central bank.Emerging market equities have been reduced to a neutral exposure from overweight. “Inflows to this asset class have been massive over the course of the year and valuations have returned to reasonable levels. Additionally, a hike in interest rates by the Fed represents a danger for this asset class,” says Frédéric Rollin, investment strategy adviser at Pictet AM.In sectoral terms, the asset management firm states that it has strengthened its exposure to health care. “The sector has been abandoned by the market following statements by Hilary Clinton promising to control the price of medicines. Valuations appear to us to have reached low points, and the sector represents an excellent hedge against a potential victory for Donald Trump,” the investment strategy adviser comments.Pictet AM has adopted a more prudent positioning with respect to European corporate bonds. Repurchases of bonds by the ECB have led to valuations at extreme levels, as the volume of issues on the primary market is high, leading to fears of an oversupply, and concerns regarding the European banking sector are in danger of sustainably ragging down this market,” the statement explains.
