MARKETS & INVESTING
The Liontrust Multi-Asset team is positive about nine of the 22 asset types we assess , with most of the remainder scoring a neutral three . The once-feared hard economic landing is looking less likely and the worst of the inflationary spikes appear to be behind us , with the impact from the main moves up in prices – caused by the recovery from the Covid pandemic and the Ukraine conflict – now largely over .
LOOKING FORWARD WITH OPTIMISM
John Husselbee Head of the Liontrust Multi-Asset team
We believe there are many opportunities in global financial markets today . Our degree of positivity is reflected in the current tactical asset allocation ( TAA ) score of four out of five , on a scale of one to five , in which the latter is the most bullish . While we are pro-risk on a tactical , 12- to 18-month basis versus our underlying strategic asset allocation ( SAA ), we believe there is still scope for more optimism .
Positive on equities We are biased towards being overweight in equities , especially those in the UK , Japan , Asia ( ex-Japan ) and emerging markets . The economic environment and outlook are positive for equities . They are still generally cheap , under-owned , and there is a lot of cash waiting on the sidelines . A strengthening global economy or further improvements in investor sentiment would give a major boost to them . Earlier this year , we added US small caps to our overweight list above . US small caps have underperformed amid the monetary tightening seen in the last two years and we believe they offer good value now .
Valuations , inflation and interest rates But risks remain , of course . Even with the equity gains in the first quarter – the second successive quarter of positive returns – there was always a risk that the significant rallies could trigger a pullback . This release of pressure materialised in mid-April . We regard such pullbacks as opportunities to add to tactical allocations . Indeed , the UK stock market has subsequently breached its all-time high . In our view , most major stock markets look fairly priced , if not quite cheap in several cases . The exception is the US , which looks expensive on many measures , although outside the Magnificent Seven mega caps , there is value available . Investors also face potential risks from continued geopolitical conflicts and tensions , and the fall in inflation has not been as quick as previously anticipated . This is impacting on the path of interest rates . When we started 2024 , there was an expectation of around six or seven interest rate cuts in the UK during this year , most notably in the second half of 2024 . Yet , the implied pricing in the markets is only for a couple of interest rate cuts in the second half of the year , such has been the stickiness of inflation . Clearly , geopolitics and inflation are linked , particularly through the oil price . Should we see continued nervousness around the Middle East and disruption of the oil supply pushing prices up , this would bring a secondary , inflationary impact .
For Investment Professionals Only . Capital at risk . This marketing communication does not form part of a direct offer or invitation to purchase securities . Before making an investment decision , you should familiarise yourself with the different types of specific risks associated with the Liontrust Multi-Asset team . This information can be found in the final Prospectus and Key Investor Information Documents ( KIIDs ) available on our website : www . liontrust . co . uk . This advertisement is a financial promotion under the Financial Services and Markets Act 2000 which has been approved and issued by Liontrust Fund Partners LLP ( 2 Savoy Court , London WC2R 0EZ ), authorised and regulated in the UK by the Financial Conduct Authority ( FRN 518165 ) to undertake regulated investment business .
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