Trevor Greetham´s Investment Clock April 2012: All that glitters

The Investment Clock has moved into the Recovery phase with growth indicators pointing upwards and inflation falling.
Question marks remain over the strength and sustainability of the current upswing, as inflation pressures could again lead to the premature withdrawal of monetary stimulus.
In China, with inflation falling sharply and a leadership transition due later this year, policy markers may replace easing at the margins with outright stimulus, which should benefit assets sensitive to global growth like commodities, emerging markets and the Aussie dollar.

LEAD INDICATORS IN FOCUS

Inflation

• The inflation scorecard is now much less negative than it has been in recent months.
• There is a worry that this may lead to a removal of monetary stimulus, which could, in turn, cause a relapse in financial markets and a dip in economic activity.

Growth

• The global growth scorecard is positive.
• However, the recovery is bumpy and unevenly distributed around the world.

CURRENT ASSET ALLOCATION POSITIONING

• We are overweight equities, property and commodities and we retain our long term preference for theUSoverEurope. We remain underweight bonds.
• We have sold gold within commodities. It is becoming less attractive within the commodity asset class. A pick up in global growth tends to favour industrial metals like copper.

Trevor Greetham joined Fidelity in January 2006 as Asset Allocation Director.  In addition to managing funds, Trevor is a member of Fidelity’s Asset Allocation Group.
Prior to joining Fidelity, he spent ten years at Merrill Lynch, where he was Director of Asset Allocation. Trevor began his career with UK life insurer Provident Mutual. He holds an MA in Mathematics from Cambridge University and is a qualified actuary.

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