INVESTMENT UPDATE

Monthly Outlook - August 2020

  • 09 August 2020
  • 5 mins reading time

While the outlook for the coming year or so is distinctly challenging, there were some positive factors that lifted sentiment in the nearer term. Fiscal stimulus in Germany, plans for a European Recovery Fund and an expansion of the Pandemic Emergency Purchase Programme all provided a bigger-than-expected boost.

As a result of these changes, we feel that European equities have become more attractive for the coming weeks, while US equities have become less so. Our core focus, though, remains on quality companies with solid cash-flows, manageable debt obligations and positive prospects in what is likely to be a difficult few months.

In fixed income, our preference for corporate bonds has paid off as the demand for and prices of dollar-denominated corporate bonds have risen. Some corporate bonds denominated in other currencies are now looking more attractive. We continue to view government bonds as expensive, giving them limited potential for further price gains.

In terms of our overall regional preference, we think that Europe could offer some short-term potential as it emerges from lockdown restrictions. But that comes with the understanding that the virus threat has not been eliminated, leaving more potential for contagion and economic fall-out.

Asset overview

Our general view of assets over the coming months can be summarised as follows:

Important information

Any views expressed are our in-house views as at the time of publishing.

This content may not be used, copied, quoted, circulated or otherwise disclosed (in whole or in part) without our prior written consent.

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In preparing this article we may have used third party sources which we believe to be true and accurate as at the date of writing. However, we can give no assurances or warranty regarding the accuracy, currency or applicability of any of the content in relation to specific situations and particular circumstances.

Forecasts of future performance are not a reliable guide to actual results. Investment markets and conditions can change rapidly and the views expressed should not be taken as statements of fact nor relied upon when making investment decisions. The value of investments and the income from them can fall as well as rise and are not guaranteed. The investor might not get back their initial investment.

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