Asset Allocation Outlook August

Markets were reasonably calm in July. The level of volatility declined on the equity markets, while capital market yields remained low thanks to the highly expansionary monetary policies. Spreads on bonds issued by southern European countries, credits and emerging market debt tightened. On balance July was certainly not a spectacular month, but it was positive for the risky asset classes. Positive news on stimulatory monetary and fiscal policies, improved economic data and better-than-expected corporate earnings were interspersed with concerns about the coronavirus. We have made no adjustments to our investment policy. We believe that equities are pricing in an excessively positive scenario and prefer high yield credits.