The Investment Clock is in the Overheat phase but interest rates in developed economies remain close to zero and President Biden’s multi-trillion dollar spending plans have yet to take full effect.
This could be a short and fiery business cycle if a surge of inflationary growth forces central banks to slam on the brakes once Covid-19 risks have passed. In the meantime, our funds are overweight commodities and underweight government bonds with equity exposure tilted towards value sectors and countries with most to gain from re-opening.
Tactical asset allocation has been a strong contributor to returns over the last year and we continue to see good opportunities. Our broad asset mix is less exposed to interest rate risk than a typical balanced fund while allocations to commodities, property and UK equities suggest a greater resilience to inflation.