The environment for risk taking – December 2019

Overall, the environment for risk-taking is Positive

Since 2009, a favourable macro environment has underpinned risk assets in varying degrees. In 2018 this changed – at least for a period.

The global economy entered a solid downturn that still is the main headwind for risk-taking. At the start of 2019, however, the liquidity cycle once again created a climate for risk-taking.

Nevertheless, our Positive Macro-climate indicator has remained in a neutral position. As a consequence, we have ‘only’ returned 14.6% in total performance on our CAP-M portfolio.

Since November, our Positive Macro-climate indicator has again moved up. The indicator has triggered an overweight of global equities in our CAP-M live model portfolio.

In Copenhagen Allocation Partner we are not in the business of guessing and predicting scenarios. We are in the business of calculated risk-taking, and for now, we are getting the signal from our data-driven investment process to – at least for a period – overweight risk assets.