Investment Strategies

Investors Should Continue To Hold Risk Assets - Pictet Asset Management

Tom Burroughes, Group Editor, 11 February 2014

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While equity markets haven’t got off to a strong start this year after the rally of 2013, investors should use any significant weakness as a tactical chance to buy, according to Pictet Asset Management.

While equity markets haven’t got off to a strong start this year after the rally of 2013, investors should use any significant weakness as a tactical chance to buy, according to Pictet Asset Management, part of Swiss private bank Pictet.

The firm remains overweight emerging markets – a stance that puts it on a different tack from some of its rivals who have been nervous about this asset class – and cautious about the US equity market.

“Growth momen­tum remains solid and inflation is largely under control. What is more, stocks’ current valuations and the Fed’s decision to reduce monetary stimulus do not loom as a hindrance to equity investors,” said Luca Paolini, chief strategist at Pictet Asset Management.

“Investors can therefore maintain a modest overweight in equities and some other riskier asset classes. While we expect developed market stocks to deliver moderate returns of some 5 to 10 per cent in 2014, we would consider any further weakness as a tactical opportunity to increase exposure,” he said in a note to journalists.

“We think the pattern of emerging market equity underperformance vs developed markets, which has widened the discount on emerging-to-developed market stocks to more than 30 per cent on a price-earnings basis – is now at odds with fundamentals,” he commented.

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