Monthly ETF Allocation Ideas - November 2019
Monday 18 November 2019
Cross Asset Investment Strategy
Amundi ETF has selected 3 ideas for your asset allocation based on the latest Cross Asset Investment Strategy publication.
Idea #1: Credit: appetite is high
– "This is a time to be cautious but not too conservative. We believe investors should stay in credit to exploit carry.”
– "On corporate bonds, we prefer EUR vs US and are now more constructive, tactically, on EUR HY (primarily for carry) on account of a benign default outlook, limited supply and dovish ECB."
– “We are positive on Euro IG, particularly on the subordinated debt financials in Europe. However, a focus on liquidity is important in this phase of the cycle.”
– “A dovish ECB supports the overall environment for the Euro HY space and we prefer it due to the carry opportunities.”
– “On US credit, we maintain a modest risk stance and focus on sectors that offer exposure to the domestic US consumer and allow us to enhance diversification in areas with attractive relative valuations.”
Idea #2: Equity: cautious stance
– “Low visibility on future earnings suggests a cautious stance on equities."
– "[DM equities] Sector rotation has opened up attractive opportunities in quality value, with a preference for cyclicals.”
– "[In Europe] Corporate fundamentals remain solid, valuation are fair and heightened volatility and market dislocations could provide opportunities. Dovish ECB should be supportive."
– "In the US, equity valuations remain attractive relative to fixed income, but the global slowdown and government policy uncertainty suggest a more prudent approach.”
– "[US] Despite challenging macroeconomic data and headlines (trade deal, Warren presidency, Trump impeachment) concerns there are certain pockets (cyclicals/value) of compelling valuation.”
– "In the EM space valuations are supportive and the market could benefit in case of a mini-deal on the trade front.”
Idea #3: Govies: hunt for yield
– "The hunt for yield will continue as the amount of negative yielding bonds is at historical highs."
– "From a global fixed income perspective, we remain neutral on duration but with a preference for duration in theUS compared to the Eurozone and Japan."
– “While on a standalone basis US govies are not cheap, they remain attractive among core bond markets."
– [European Govies] we remain positive on the main peripheral European countries (Spain and Italy) fuelled by ECB expectation and a new political coalition in Italy willing to find agreement with the European commission on the 2020 budget."