Barclays Wealth, the global wealth management institution, announced today its monthly research providing a set of investment recommendations for investors all around the globe. The June "Compass" edition from Barclays Wealth, which provides a set of recommendations based on quantitative as well as qualitative research, projects a continued view for global economic recovery with corporate profits leading the way. Investment recommendations for the month of June include tactical asset allocation (staying over weight equities) along with an investment call for investors to go long Swedish krona and short Euro.
Khurram Jafree, Head of Investment Advisory MENA at Barclays Wealth, said: "The upside and downside risks now look more equally balanced than they had previously appeared. We, at Barclays Wealth, still believe that investors should hold a full complement of risk assets, and that all portfolios should contain some investments that will do well if the recovery falters."
Compass' June Research also looks at how the global economy continues to recover, with corporate profits leading the way. The overweight position in equities is smaller than it was, but stocks remain the preferred core asset class. The report suggests that investors should not rush into selling equity portfolios and remain invested. Equity markets look to offer long-term value at these levels, but in the very short term, it may be a good idea to take a step back and wait for things to calm down.
"Early last month we reduced the equity overweight in our model portfolios. Over a six-month period, our strategists still expect global equities to outperform other assets – particularly cash. However, they recommend to wait for volatility to subside before committing new funds and would urge that investors retain a full weighting in high-quality long- duration government bonds to provide some protection if growth falters" said Khurram.
Compass also highlights a slow and halting recovery in the Euro-zone and continuing concerns about the region's long-term structural challenges will cause the euro to remain under downward pressure. Barclays Wealth prefers selling the euro against a number of other European currencies, especially the Swedish krona (SEK), since Sweden is likely to grow faster than the euro area, the currency looks undervalued, and the government's deficit and debt ratios are relatively well-behaved.
Jafree concluded: "Our strategists expect that Sweden's growth outlook will support the krona. Although the Swedish economy suffered badly in the recession, mainly due to the sharp fall in investment spending, we expect it to grow more strongly than the euro area this year."
