Outlooks

Region:

Europe

Edition:

Selector

Following the US election we have increased our allocation in equities substantially, from a neutral position to an overweight. Most of the change in allocation has been directed to US equities, with a bias towards small-cap companies.

While increasing equities to an overweight, we maintain a neutral exposure to fixed income. We significantly reduced our cash allocation once US election uncertainty disappeared and the confirmation of a Red sweep from the Republican party of the White House and Congress. We have a high conviction position in US small-cap equities, which could outperform in the current context of a decelerating US economy and interest rates coming down. However, we emphasise the need to remain selective in this space.