Global CIO Podcast: "We are seeing the first signs of recovery."
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Global CIO Podcast: "We are seeing the first signs of recovery."

The resilience we highlighted last month has been on full display over the last few weeks. Despite a very recent pullback in US equities, markets have broadly rallied as many investors left the sidelines amid worries that they might miss out. As a result, many equity indices have managed to recoup a significant part, and in some cases all, of their year-to-date losses.

The moderate equity overweight we have had in portfolios since late March has, of course, helped us to benefit from this strong rebound. Since the low point on March 23, the S&P 500 Index has risen around 40%; we were overweight equities for almost the whole recovery. While we are far from pre-crisis levels in terms of economic activity, stock markets almost are. We think this gap can be explained and justified by the unprecedented stimulus measures that we have seen during the coronavirus crisis.

Listen to the new House View podcast with Nannette Hechler-Fayd'herbe
Chief Investment Officer – International Wealth Management

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Nevertheless, in the Investment Committee (IC), we critically assess our House View regularly, particularly after such a successful stretch. Temporary setbacks are possible, but we retain our risk asset exposure and remain overweight equities and credits in portfolios for now. We believe that the substantial fiscal and monetary stimulus, the lack of alternatives for yield-seeking investors amid very low interest rates, and the inclusion of lower-rated corporate bonds in central banks' asset purchase programs should unlock further upside in the medium term.