ABN AMRO Private Banking has increased the equity component of its balanced portfolio at the expense of bonds and hedge funds. It now holds 44 per cent in equities (up from 40 per cent), 44 per cent in bonds (from 45 per cent) and 5 per cent in hedge funds (from 8 per cent).

“Despite the recent rise in equity markets, we believe an enormous gap exists between the apparent bullish consensus on equities and effective low positioning in equity markets by ... investors. Our confidence is underpinned by the growing market resilience to bad news and we also see a positive correlation between rising stock markets and the US dollar,” Didier Duret, chief investment officer of ABN AMRO Private Banking, said in a statement.

Within equities, the bank remains overweight in emerging Asia and Brazil, neutral in Europe and  underweight US and Japan. In terms of sectors, it favours industrials and healthcare, while remaining underweight in defensive sectors such as telecoms and utilities.

The bank expects the US dollar to continue rising. It says that gold could continue its decline this quarter and predicts that is will fall to $1,400 by the year end.