In our sector allocation, we remain overweight Growth sectors. Besides IT and New Energy this also includes Healthcare and Biotech. As implied on page 3, we see the aggressive monetary policy support as a key driver of growth stocks. If the FED should start signaling limitations to its expansion of its balance-sheet, we would most likely need to adjust our sector allocation accordingly.
Credit condition-driven sectors like Real Estate, Infrastructure and Financials are generally underweighted in our portfolio. Lately, we have moved Financials up to Neutral due to a better earnings score. But this segment is significantly challenged by weak credit conditions and higher funding spreads (see page 3)
When it comes to cyclical stocks, we continue to stay underweight Consumer Disc and Industrials. Our models suggests that we will see a new round of weakness for global GDP and PMIs in the coming months, which will affect the attractiveness for these sectors. Our most optimistic take, is on cyclical small-mid cap stocks in Europe. Here we have lifted our weighting from Underweight to now Neutral.
COVID-19 has hit the usual safe bet in Consumer Staples, and our favorite industries within Defensives remain Water Utilities and Gold. Both industries are held in Neutral. The key macro driver of this segment will most likely be real interest rates. If the recent tendency of higher real interest rates should continue, we will most likely adjust its weighting further down. The sector allocation is implemented in our Cross-Asset Model Portfolio. See https://c-a-p.dk/our-fund
