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Our views 09 February 2023

A positive start to the year in a challenging environment

5 min read

Equity markets have followed a difficult 2022 with a more positive tone in January. However, our Investment Clock is still indicating that markets will have to deal with softer global growth, even if inflation pressures are moderating and that encourages markets.

The Investment Clock

Moved to Reflation

Graph shows the Investment Clock has moved to reflation. Trail shows monthly readings based on global growth and inflation indicators.

Source: RLAM as of January 2023. For illustrative purposes only. Trail shows monthly readings based on global growth and inflation indicators.

Last year, being broadly diversified and creating global portfolios for UK investors, gave the portfolios great resilience. Our approach is distinctive thanks to our strategic asset allocations including property and commodities as well as in regional equity allocations.

Beyond Balanced

Broader diversification for a wide range of scenarios

Graph shows asset allocation on a mix of Multi Asset funds as at September 2022

Source: Expected risk and return based on RLAM’s capital market assumption as of September 2022. Gross of fees. Please note that this does not reflect the actual performance of the RL GMAP Fund range and should be used for information purposes only, not as a reliable indicator of future performance.

Property values

In the long term, we believe that property benefits our funds by enhancing the risk, return and income characteristics of the portfolios.

Recently, there has been weakness in property markets due to interest rate increases and political uncertainty; this leaves property as perhaps the only asset class to look as if it is pricing in a recession. In our view, this means the recent weakness of property is taking it towards attractive long-term buying points. We have been underweight property given the weakening global growth environment and interest rates rising. Perhaps, the most interesting question regarding property is when to add.

Commercial property is an important diversifier

Offering inflation-beating returns

Graph shows property and equity returns vs. inflation as at 6 February 2023.

Past performance is not a guide to future performance. Source: RLAM and Refinitiv Datastream as at 6 February 2022.

Current positioning

Given a more positive tone from our Investment Clock regarding inflation moderating, we have been overweight stocks and high yield tactically – and this has benefited our portfolios in the recent rally.

We do not think we are at the beginning of a new bull market and would not be surprised to see earnings weakness, resulting from a slower global economy, damaging sentiment in stocks once again. In our active tactical asset allocation process, we are ready to move underweight equities if necessary, depending on data and our models.

With bond yields now much more attractive than they were while central banks were printing money to buy them, we have added and moved towards neutral. But with a slowing global growth environment, we remain underweight property and commodities.

Where we stand 

Overweight global high yield, global and emerging market stocks

Underweight US and Japanese stocks, commodities and US dollar

Graph shows fund allocation weightings as at 6 February 2023.

Weightings may vary according to tactical asset allocation and the Fund may invest ourside of indicated asset classes as the manager sees fit. Source: RLAM. Tactical positions as of 6 February 2023.


This is a financial promotion and is not investment advice. Past performance is not a guide to future performance. The value of investments and any income from them may go down as well as up and is not guaranteed. Investors may not get back the amount invested. Portfolio characteristics and holdings are subject to change without notice. The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.