The document discusses a neutral outlook on risk assets, citing solid economic growth and supportive policy measures as key factors. It emphasizes the importance of a diversified investment portfolio grounded in solid fundamentals to navigate market volatility. Additionally, it warns against trying to time the market and suggests consulting a financial adviser for tailored investment decisions.

1. Market Watch – November 2015
November Rain
STRATEGY
Neutral on risk as solid
growth and policy
support provide
reassurance
EQUITY
Don’t chase the
bounce, and retain
a preference for
developed markets
FIXED INCOME
Accept some
credit risk to gain
carry and limit
impact of Fed rate
hikes
FX
Policy divergence
back in focus to give
USD boost over EUR
or JPN
The past few months have provided a salutary reminder of the dangers and difficulties in trying
to time the market. A month ago we were arguing that markets were overshooting and were
looking for an opportunity to turn more positive on risk assets, but the rebound has come through
earlier and much more sharply than expected.
The rebound supports our relatively positive view on the global economy, in particular the
recovery in developed markets. As in recent years, this is underwritten by the prospect of looser
monetary policy when necessary. Importantly, the data suggests that the Chinese economy is
starting to stabilise, for the moment at least, as policy stimulus starts to gain some traction, and
this dampens concern that a hard-landing is imminent.
Re-assured by the economic news flow and the policy environment we retain our broadly
neutral approach to risk assets. Volatility might rise ahead of the Fed rate hike (we still expect this
in December, but it is a close call), which would produce the opportunity to deploy cash.
Market volatility also teaches the lesson that investment portfolios should not just be well-
diversified but they should also be based on solid fundamentals. Having confidence in the fair
value of an asset reduces the chance of falling victim to typical behavioral finance biases and
being panicked into selling at the bottom. Looking through the volatility can be a tough
discipline and one solution is to delegate responsibility to investment professionals.
Marc Van de Walle
Global Head of Products

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