Our outlook

House View, October 2019

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

Perspectives Pictet

House View, October 2019

Asset Allocation

  • Seeing renewed tactical interest in undervalued areas of the market, we have moved from an underweight to neutral stance on global equities, expressed through a carefully calibrated exposure to small- and mid-cap equities.
  • Our core investment themes remain in place: in equities, we are focused on quality, dividend growers, companies with pricing power and those with visible growth drivers. We see volatility as an asset class in its own right, to be played through options and structured products. Fading economic growth and heightened M&A mean potential in event-driven hedge funds and negative short-term rates mean we seek alternatives to cash.
  • We have an underweight stance on government bonds, with the exception of US Treasuries, where we are neutral. We have a neutral stance on investment-grade credits but underweight high yield. We prefer emerging-market (EM) debt to EM equities


  • Our central scenario for oil remains unchanged: although events such as the mid- September attacks on Saudi oil facilities may cause temporary spikes in prices, massive new US oil exports mean the price of Brent could fall towards USD50 in early 2020.


  • We believe the yen’s recent weakness will prove temporary. Combined with declining rate differentials, fading global growth and the risk of rising market volatility may play into the hands of a defensive, undervalued currency like the Japanese yen against the US dollar.


  • The style rotation from ‘growth’ to ‘value’ and cyclicals seen in September still needs to be confirmed by a stabilisation of the economic environment (and higher yields for banks). Defensives started to outperform again at the end of the month.
  • Indian equities experienced a roll-coaster ride in September, hurt by disappointing growth data but rallying after the unveiling of major fiscal stimulus. The impact of this stimulus on the performance of Indian stocks will be closely monitored in the coming months.
  • As the Q3 earnings season gets under way, corporate messaging and guidance will be watched closely. Expectations are already low for cyclical stocks – but they are exposed to macro developments – while defensives will have to convince investors that growth drivers remain in place.


  • As active real estate investors, we are tracking the technical solutions being found to improve environmental efficiency in a commercial real estate sector that accounts for 40% of global carbon emissions.

Fixed Income

  • The surge in government bond yields seen in early September subsequently went into reverse. We believe European government yields could remain range bound until year’s end but that there is scope for US yields to go lower.
  • We continue to prefer quality and relatively short duration in credit as the macroeconomic picture becomes clouded. We have an underweight stance in US high yield as cracks appear in the lowest-rated part of the spectrum and default rates rise.
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