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Our views 24 November 2021

Current multi asset positioning – November 2021

5 min read
  • Equities have had a sharp rally from the spring of last year when Covid first led to lockdowns; markets have been supported by very significant monetary and fiscal policy and confidence has been strong given the rapid development of vaccines.  Our multi asset funds have benefited from being overweight equities through the rally but with valuations now more challenging while growth is peaking and inflation concerns are increasing, we have taken some profits and as we approach the end of 2021; we are only modestly overweight equities currently. Should there be a short-term cause of some market weakness, we are able to add; if there are serious virus or geopolitical issues which lead to longer-term concerns, we would de-risk.
  • With the global economy reopening, supported by vaccines, we have expected strong global growth this year and into next; this has led us to move overweight equities in Q4 2020 and we retain this position. Commodities have done well this year, but the position also gives our portfolios greater inflation resilience should price increases prove to be less transitory than markets expect / hope.
  • Given inflationary pressure in the world, government bonds have been seeing capital losses this year, despite their reputation for safety and continuing quantitative easing aimed at keeping yields lower. As inflation leads interest rate expectations to increase, we have been, and remain underweight government bonds. We prefer RL active global high yield funds to government bonds, particularly favouring short duration.
  • We remain overweight US stocks even though they are relatively expensive because of the innovation in the US; most tech ‘unicorns’ are US companies and better growth prospects / profitability deserves some valuation premium; we have however taken some profits in the US and added to the more attractively valued UK market which benefits given significant sectoral exposures to commodities, energy and financials from a global cyclical recovery.
  • We have been positive on emerging markets in the past but currently are underweight given the size of China in the index and some of the issues facing Chinese property and education companies. Longer term, we see great growth opportunities in emerging markets.
  • We remain underweight the Asia Pacific region given vaccine deployment has lagged relative to the US and they are impacted by Chinese growth concerns.  
  • In sectors, we have more exposure in areas which benefit from strong global growth and a steepening yield curve (e.g. energy, mining, financials). We are slightly underweight technology given the sector tends to struggle when inflation starts to push up interest rates (valuations are very sensitive to interest rates when it is future earnings which are most important).
  • Currencies – we are not taking significant FX risk but, consistent with taking profits and being relatively lightly positioned now, we are overweight the USD (which is considered more defensive).

Where we stand

Overweight global high yield, commodities and value stocks

Image shows tables indicating asset allocation weightings within the multi asset team split by asset class, region, sector and currency

Weightings may vary according to tactical asset allocation and the fund may invest outside of indicated asset classes as the manager sees fit. The views expressed are the author’s own and do not constitute investment advice.
Source: RLAM. Tactical positions as of 11 October 2021.


Past performance is not a reliable indicator of future results. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally 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.