Asset Allocation Update
PORTFOLIO POSITIONS AS AT 31 JULY 2020
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cash
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Cash remains important to provide liquidity and ensure we can act decisively when new investment opportunities arise.
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Equity
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We are positive over the medium term as unprecedented stimulus from central banks and governments will help companies recover from the COVID-induced recession.
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Gold
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Gold currently offers attractive diversification benefits, particularly as low real yields are likely to persist given the accommodative stance of central banks. The debt-financed stimulus and geopolitical tensions also support gold.
![](/content/dam/rbs-coutts/coutts-com/Images/q3-2020-investment-campaign/3.png)
Government bonds
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Expensive valuations and yields close to zero mean return potential and diversification benefits are muted for the time being.
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corporate bonds
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Central bank support for companies should support corporate debt, and reinforces its relative attractiveness against government bonds at the moment.
![](/content/dam/rbs-coutts/coutts-com/Images/q3-2020-investment-campaign/4.png)
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Equity
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We are positive over the medium term as unprecedented stimulus from central banks and governments will help companies recover from the COVID-induced recession.
![](/content/dam/rbs-coutts/coutts-com/Images/q3-2020-investment-campaign/AA1.png)
Government bonds
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Expensive valuations and yields close to zero mean return potential and diversification benefits are muted for the time being.
![](/content/dam/rbs-coutts/coutts-com/Images/q3-2020-investment-campaign/AA2.png)
cash
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Cash remains important to provide liquidity and ensure we can act decisively when new investment opportunities arise.
![](/content/dam/rbs-coutts/coutts-com/Images/q3-2020-investment-campaign/AA5.png)
Gold
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Gold currently offers attractive diversification benefits it offers, particularly as low real yields are likely to persist given the accommodative stance of central banks. The debt-financed stimulus and geopolitical tensions also support gold.
![](/content/dam/rbs-coutts/coutts-com/Images/q3-2020-investment-campaign/AA3.png)
corporate bonds
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Central bank support for companies should support corporate debt, and reinforces its relative attractiveness against government bonds at the moment.
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Taking Action
OVER 2020 WE HAVE BEEN ADAPTING OUR INVESTMENTS TO THE RAPIDLY CHANGING CIRCUMSTANCES
Markets fell sharply as the extent of the crisis became clear
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PORTFOLIO THEMES
INCREASED BIAS TOWARDS EQUITY
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The swift and sizeable response to the COVID-19 pandemic from central banks and governments has supported equity markets through the crisis so far and provides a sound backdrop for the coming months. We’ve increased our exposure in regions and sectors that are mostly likely to benefit as economic momentum takes root and continues to improve.
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JAPAN
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europe
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us banks
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EMERGING MARKETS
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JAPAN
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europe
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us banks
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EMERGING MARKETS
CORPORATE DEBT OVER GOVERNMENT BONDS
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Government bonds offer low yields and little potential for gains in the coming months. Corporate debt meanwhile has higher yields and default risk has been substantially reduced by the scale of support from government and central banks.
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Investment grade
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financial credit
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emerging market debt
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Investment grade
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financial credit
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emerging market debt
GOLD
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Provides portfolio diversification and ballast in the event of big market drawdowns and offers protection against the potential for big currency moves due to the build-up of government debt during the pandemic.
RESPONSIBLE INVESTING
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Stronger balance sheets, good employment policies and better risk management of highly ESG-rated companies all help to preserve shareholder value during times of economic disruption. Low-carbon tracker funds have reduced exposure to the energy sector, which has suffered from low demand during the lockdown period, and increased exposure to technology, which has benefitted.
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sustainable policies
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low-carbon funds
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sustainable policies
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low-carbon funds
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