Welcome to the July edition of “Market Perspectives”, the monthly investment strategy update from Barclays Private Bank, which is also available to download as a PDF [PDF, 556KB].
As we turn to the second half of 2019, all economic data points to an extended late cycle with any recession a distant threat. Although volatility is likely to remain relatively high this year, we take a look at the benefits of being invested, compared to trying to time the market.
Back in April, we thought that there were signs of inflation coming in higher than was being priced by the market. While inflation might still surprise to the upside, especially if trade tensions escalate, risks have faded. So we have removed our inflation investment theme.
There was a surge in bonds offering negative yields last month, after the US Federal Reserve signaled that more rate cuts were on the cards. With investors looking for ways to enhance returns, emerging markets bonds may be part of the answer. That said, selection will be key.
With interest rates low and geopolitical tensions to the fore, private equity may have a role to play in globally-diversified, multi-asset portfolios. The asset class has little correlation with bonds and commodities, offering diversification benefits.
The bounce seen in global equities in June was a welcome relief after May’s sell-off. Focusing on equities with a quality bias still looks like the best approach, despite the high valuations. And with equities unlikely to climb much more over the rest of 2019, active strategies are preferable to passive ones.
To download the full pdf, click here.