Barclays is broadly positive about the equity market and will use any significant reverses as a reason to snap up assets with a view to long-term gains, while it favours high-yield credit, short-term quality debt and cash.

The UK-listed bank’s wealth and investment management division, in its latest Compass report, is taking a tactically bearish view on government bonds, an asset that Barclays expects to remain volatile and sees as highly priced.

In general, Barclays said its current tactical stance on asset allocation is neutral towards risk assets. In strategic terms, the UK bank has a “constructive” stance on stocks, seeing these assets as likely to outperform bonds and cash in the next few years.

The firm said its strategic asset allocation “embodies a more positive stance on equities, which remain inexpensive…particularly developed stocks, the cheapest asset class of the nine that comprise our SAA [strategic asset allocation] – even after the rally and which will likely be underpinned by resilient corporate profitability in the slow but positive growth environment we envisage,” the report said.

“As we write, the latest US results season is fostering some profit-taking after some high-profile misses, but analysts overall seem so far to have aimed a little too low with their immediate profit forecasts,” the note continued.

“With this in mind, the tactical setbacks we see as possible in the weeks and months ahead should be seen as opportunities for long-term investors whose current weightings are below what we would recommend to move into these risk assets, not retreat from them – provided, of course, that the investors financial circumstances and personalities permit,” it said.