The wealth management firm has set out its asset allocation positions, arguing that investors appear to have already priced in a "worst-case" Gulf clash scenario, with investor behaviour, AI and earnings providing a measure of reassurance.

Apricus Finance, an external asset manager, says it is holding to a neutral position on equities, and holds between 9 to 12 per cent of its portfolio in cash and cash equivalents because of economic uncertainties.

The firm said it is, within its overall equities position, taking an overweight eurozone and Asian ex Japan position versus the US excluding the “mega caps” area.

Turning to bonds, Apricus said it continues to favour credit versus duration exposure (or interest rate sensitivity). The firm has, however, increased the quality of its holdings by raising exposure to investment-grade credit, European high yield, hybrids and financials’ subordinated debt.

Apricus said it is keeping its gold allocation at about 3 per cent; the wealth manager is also overweight commodities as a whole. Shifting to currencies, the firm said non-US dollar-referenced portfolios are fully hedged against the dollar and yen.

Investors appear to have priced in the “worst-case” scenario in response to the US/Israel military clash with Iran and expect US President Donald Trump to seek an exit strategy, Apricus said, setting out its views. It expects US earnings to rise about 12 per cent. AI is also back as a positive force in the market, as announcements of rising spending and joint ventures come through, reassuring investors about the theme. There is also, Apricus said, a return of a “dip-buying mentality” as investors profit from buying selloffs amidst volatile conditions.

Reflecting on the energy crisis stemming from the Gulf conflict and the fallout, Apricus said inflation is likely to stay “higher for longer, particularly in the US.”

“Growth will also be impacted. A couple of quarters of lower growth with a brighter outlook will not derail the equity market. But sustained lower growth will. It will also determine the path for central banks. So, the central question is whether the shock is short term, with a quick resolution in sight, medium term with some stagflation for a few quarters, or whether the situation doesn’t improve that quickly and the world economy tethers on the brink of recession with stubborn inflation, (worst case scenario),” it said.