The Robeco multi-asset team has taken advantage of political uncertainty in France to snap-up assets cheaply, particularly in the European banking sector.
In a portfolio update, head of multi-asset solutions Colin Graham revealed the firm has now removed the underweight it had to European equities.
Graham also sounded a note of caution on the rich valuations seen in certain other areas of the market.
“We see a supportive environment for equities at the moment, however valuations in certain areas such as US equities, high-yield and US dollar remain eye-wateringly high,” he said.
“We still believe that small caps will struggle in the higher for longer interest rate environment, especially in US.
“The political concerns around the snap French election called by President Macron, provides this opportunity to implement as euro sceptics dust off the arguments about eurozone stability,” Graham continued. “We will be monitoring the situation as it evolves and look to take advantage the volatility.”
Graham noted that the “bottoming out” of global manufacturing has driven positive money supply growth, even before any rate cuts.
“We have closed our long commodities position as we saw moves that could not be reconciled with macro and political events,” he added. “Some of these pricing anomalies have closed and we are now waiting for oil to find a base post the OPEC+ meetings.”
In fixed income, Graham said the team is cautious on the direction of the lower grade credit, but short duration sovereign and investment grade bonds are preferred as curves remain inverted.
This article first appeared in our sister publication, PA adviser.
