Our outlook

House View, March 2020

Pictet Wealth Management's latest positioning across asset classes and investment themes.

Perspectives Pictet

House View, March 2020

Asset Allocation

  • Given the current lack of visibility, financial markets are starting to anticipate quite a negative scenario. Equity valuations could start to discount a decline in 2020 expected earnings growth.
  • We have downgraded our overall equities positioning to underweight from neutral to take account of spreading concerns about covid-19. We have also refrained from taking a buying opportunity until the risk of a global recession can be ruled out.
  • Given the recent market correction and elevated volatility we are de-risking and adding to protection in portfolios, while opportunistically playing volatility as an asset class. Defensive currencies as well as quality in credit also look relatively attractive.


  • The US dollar’s underperformance during market turmoil at the end of February highlights the erosion of its yield advantage and its long-term, fundamental overvaluation. The Swiss franc was strong in February, but could be confronted by more stringent intervention by the Swiss National Bank.
  • Following its recent decline, the rise in concerns surrounding covid-19 is turning the yen into the most attractive defensive currency. Gold also continues to look attractive in spite of the recent rise in price. We have raised our 12-month projection for gold to USD1780 per troy ounce.


  • Our ‘structural grower’ theme for 2020 remains the right call. The cyclical value tilt remains a good diversifier within an extremely polarised market.
  • We are sticking to our underweight stance on EM equities for now, as the full impact of the coronavirus containment measures on supply chains and corporate earnings may have a second-round effect. However, we remain on the lookout for signs of a potential recovery, driven by depleted stocks and rebounding demand.
  • Sector wise, we continue to expect a rebound in the earnings of semiconductor stocks, assuming covid-19 disruption remains limited. We also remain positive on US pharma, in spite of current political rhetoric.


  • We see three strategic areas to explore in real estate: defensive assets that chime with demographic trends; investing in disruption; and positioning in distressed or stressed property assets that offer good potential. High volatility and low returns in classic asset classes is heightening the interest of private assets in general. 

Fixed Income

  • EM central banks will likely continue cutting rates and since we expect the USD to weaken in H2, we retain our overweight on EM local-currency sovereign debt.
  • We have moved from a neutral stance on European high yield to an underweight one as part of an overall effort to de-risk portfolios in the current environment. We remain neutral on EM corporate debt.
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