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Our views 08 July 2024

Multi asset fund update: De-risking into patchy recovery and diminished rate cut expectations

5 min read

Our proprietary Investment Clock is indicating we are in the stage of the economic cycle when growth is improving, if slowly, and interest rates can begin to fall later this year as inflation weakens.

The US has been the best performing major economy while Europe and China have patchier growth pictures. Geopolitical risks remain but with a marginally improving global growth backdrop, we remain slightly overweight equities in our multi asset funds but less exposed than we have been over the last eighteen months. Seasonality is observable in equity returns over the years and this summer, after a strong equity rally, may well give us dips to buy.

Chart 1: The Investment Clock

Is in OverheatChart 1: The Investment Clock - is in overheat

Source: Royal London Asset Management, for illustrative purposes only. Trails shows monthly readings based on global growth and inflation indicators. Yellow dot shows where we are in the cycle.

Cross asset

  • Equities: slightly overweight given a slowly improving macro environment and signs of earnings growth recovering gently.
  • Commodities: neutral given geopolitical risks and recovery potentially leading to stronger demand.
  • Property: slightly underweight as interest rates are yet to fall and stimulate the UK commercial market.
  • Government bonds: underweight as the market comes to terms with inflation being sticky (preventing significant interest rate cuts to date).
  • Credit: constructive, but watchful for signs of stress.

Equity regions

  • Overweight US equities given superior economic performance in America, compared to Europe and China, and the strength of tech-related earnings.
  • Neutral in Japanese equities which have done well on yen weakness, having taken profits.
  • Underweight UK, Europe given the defensive nature of the sectors dominant and political risks.
  • Neutral on Asia Pacific but now slightly overweight in emerging markets given Chinese government comments about improving its property sector’s debt issues.


  • Neutral in major currencies given geopolitical risks and elections potentially causing volatility.


  • Overweight modestly the interest rate sensitive consumer discretionary sector given rate cuts expected.
  • Underweight energy as oil and gas price inflation has moderated.
  • Neutral to positive on technology given growth potential but not more overweight given elevated valuations.

Chart 2: Where we stand

Overweight global and US stocks and global high yield. Underweight bonds, UK and European shares and energy sector.

Chart 2: Where we stand

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: Royal London Asset Management. Tactical positions as of 1 July 2024.


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.