Pictet overweight on telecoms, banks and UK commercial property
Shaniel Ramjee, investment manager for Pictet’s multi-asset team comments on the team’s latest asset allocation decisions.
Within Europe we like the telecoms sector where companies are bringing in healthy revenues from mobile data usage, as well as the higher M&A activity in the sector.
Furthermore, we expect to see big earnings improvements from banks in Europe as the economy improves, and because Italy’s stock market is dominated by banks, we have significant passive exposure there.
In the US, our exposure to equity markets is via those sectors most exposed to US growth, such as consumer discretionary through a passive vehicle, where we see continued scope for increasing consumer spending.
Technology is another sector which gives us access to the vibrant digital economy and this is an area we manage actively.
In credit, we prefer the high yield market over that of investment grade and are particularly drawn to the US. Given the recent energy related weakness, yields on offer are attractive for long term investors, and we prefer the higher surety of coupons relative to the earnings and dividends in some US corporate sectors.
Given the low yields offered by mainstream bonds, Pictet Asset Management multi-asset team are on the look-out for asset backed lending opportunities.
We have exposure to UK commercial property in the portfolio, reflecting our optimism about the economy and we think rental yields are attractive relative to the return on bonds. We also look into other alternative investments, such as our 6 per cent exposure to aircraft leasing which yields more than 8 per cent and is backed by a real asset.
We like to keep the portfolio simple, long only, and made up of clear and transparent building blocks where every exposure has risk-return characteristics that are easily understood. We don’t do financial engineering and we’re not subject to short positions going wrong or mishaps arising from use of leverage.