020 7189 9999
Opening hours
Mon - Fri: 7.45am to 6pm (Thurs 8pm)
Sat: 9.30am - 1.30pm
Request a call back
  • Home
  • News
  • Economic overview and summary of our asset allocation decisions November 2016

Economic overview and summary of our asset allocation decisions – November 2016

Economic overview and summary of our asset allocation decisions – November 2016

Halloween was not the only event that spooked investors in October. In fixed income markets, yields on many Government bonds hit multi-month highs, as inflation expectations increased and markets started to price in a shift in monetary policy. UK gilts and sterling were the notable underperformers in the month, following comments that suggested the UK Government was open to a ‘hard Brexit.’

Our view – asset allocation summary

• At its October meeting the Asset Allocation Committee decided to make no changes to the centralised models

• The cautious positioning of the models is believed to be appropriate given the challenging outlook; current levels of investor complacency increasing the risk of a significant correction across asset classes

• Despite our lack of conviction in the health of the US economy, the Fed will likely have to increase rates in December to retain any credibility – this could give rise to a stronger dollar, higher bond yields and could kill off the equity rally. However, cable does look stretched at these levels

• Central banks are now clearly approaching their limit in terms of their ability to stimulate markets, and the change in Bank of Japan policy suggests this is becoming more widely recognised. Central banks and markets will likely look through short-term and transitory inflation, with fixed income positioned for a ‘secular stagnation’ environment

• However, there is a risk that bank lending in the UK and US and fiscal stimulus could further back-up bond yields. Increased fiscal spending could benefit Main Street, but not Wall Street, though such stimulus could still be some way off.



Important information

The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested. This is not a personal recommendation or advice to invest. Past performance is not a guide to future performance.

Funds may carry different levels of risk depending on the industry sector(s) in which they invest. You should ensure that you understand the nature of any fund before you invest in it.



The value of your investment can go down as well as up, and you can get back less than you originally invested.

The Bestinvest Online Investment Service, including any account analysis and investment reports provided by our guidance services, is an online execution-only dealing service for investors who want to make their own investment decisions. It does not provide advice on the suitability of products and investments; if you are unsure about the suitability of any investment you should seek professional advice. Clients of our Investment Advisory Service and Managed Portfolio Service can use the website to obtain current valuations of their investments but cannot trade on these accounts online and should call their adviser if they wish to discuss changes to their investments.

Past performance or any yields quoted should not be considered reliable indicators of future returns. Restricted advice can be provided as part of other services offered by Bestinvest, upon request and on a fee basis. Before investing in funds please check the specific risk factors on the key features document or refer to our risk warning notice as some funds can be high risk or complex; they may also have risks relating to the geographical area, industry sector and/or underlying assets in which they invest. Prevailing tax rates and relief are dependent on your individual circumstances and are subject to change.

Issued by Bestinvest (Brokers) Limited (Reg. No. 2830297), which is authorised and regulated by the Financial Conduct Authority. Financial services are provided by Bestinvest (Brokers) Limited and other companies in the Tilney Bestinvest Group, further details of which are available here. This site is for UK investors only.
© Tilney Bestinvest Group Ltd 2016.

Version: RC1027.44113