Royal London’s multi asset funds lagged behind simple balanced funds in the deflationary first Act of the Covid-19 shock given an unexpectedly strong performance from gilts. We believe our broader asset mix will put us in good stead in what could be a more inflationary second Act.
Policy is extremely loose, as the surge in gold testifies, and central banks have no plans to tighten until the virus has gone. We are moderately overweight equities and commodities with a large position in high yield bonds. Immunity levels are low and a relapse is possible but we would ultimately buy dips in the expectation of further stimulus.