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The Investment Clock

The concept of using a Clock to illustrate the cyclical nature of the economy with various investments positioned where they are most attractive can be traced back many decades. In the 1990s, Trevor Greetham, Head of Multi Asset at Royal London Asset Management, started the research that led to the comprehensive Investment Clock model we use today.

The premise of the Clock is that the economy follows periods of expansion and contraction, overheating then cooling off, with inflation picking up and then falling away after growth slows. Each of the four phases of the cycle favours a particular asset class. Its current readings are based on past trends and the momentum of lead indicators.

The Clock’s horizontal axis measures inflation, while its vertical axis indicates economic growth. In simple terms, the economic cycle moves through waves, from prosperity to decline, with central banks inflating or deflating monetary policy as a means of stabilising activity within the economy.

Image is a visual representation of the Investment Clock investment approach which is described in the text on the page.

Source: RLAM. For illustrative purposes only.

Tracking the movement through each of the Clock’s quadrants: Reflation, Recovery, Overheat, and Stagflation, can guide rotation across assets and sectors.

Using the Clock

In order to use the Investment Clock, you need a way to tell the time. This can be easier said than done, and is dependent on an accurate reading and interpretation of the indicator data.

At Royal London Asset Management, our asset allocation team are responsible for ‘telling the time’ on the Investment Clock. Head of Multi Asset, Trevor Greetham, and Senior Economist, Melanie Baker, work closely together to undertake a rigorous analysis of the data used to ‘set’ the Clock.

The Investment Clock diagram sums up which asset classes and sectors tend to do best at each stage of the global economic cycle. The positioning of each type of investment is based on more than four decades of historical data.

As well as asset performance, global economic growth trends, and inflation figures, their research encompasses many different indicators including earnings, housing, money supply, survey, employment and wage data among others.

In addition to this fundamental analysis, the team regularly engages with Royal London Asset Management's asset class specialists, as well as policymakers and external strategists, to formulate their views. From these multiple sources, the team has a high degree of conviction around their reading of the Clock.

The Investment Clock is an important part of our thinking but it is only one of a number of intuitive factors included in the Multi Asset team's models. Quantitative analysis provides a firm foundation for making an investment decision but our pragmatic investment process leaves room for experience and good judgement to play their part as well. History often repeats itself in broad terms but there are unique aspects to every economic cycle.

Current position

Enters recovery

As at September 2025. Trail shows monthly readings based on global growth and inflation indicators. Yellow dot is the current reading.

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Source: Royal London Asset Management. For illustrative purposes only.

The Investment Clock is updated by the Multi Asset team on a regular basis. To find out more about the concept and premise behind the Investment Clock, visit our Multi Asset capability page.

Commentary

September 2025

No such thing as passive in multi asset

Our strategic asset mix aims to maximise growth for a given level of risk by diversifying across real assets, inflation hedges and more defensive fixed income and cash holdings. We seek to add value on a day to day basis through tactical asset allocation and active security selection.

Modestly overweight stocks; gold as a hedge 

Global stocks continue to make new highs, buoyed by positive economic data surprises, low volatility and neutral investor sentiment – all of which suggest the rally may have further to run. We maintain a modest overweight equities, favouring the US and Japan over Europe. Within US sectors, we remain overweight the growth complex where relative earnings remain the strongest. Gold continues to serve as a valuable diversifier in the current environment, supported by fiscal concerns and questions around Fed independence.

Tariffs to extend Spikeflation

The pandemic ushered in a new regime of “spikeflation” characterised by periodic price level shocks and shorter boom-bust cycles. The Trump Tariff shock could end up like Covid – a deflationary panic giving way to an inflationary recovery. Stimulus is not a given in a supply shock, however, and a longer, more painful workout like the GFC can’t be ruled out.

The views expressed are the author’s own and do not constitute investment advice.
Source: Royal London Asset Management as at September 2025.

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