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The Investec Global Investment Strategy Group (GISG) has moved its positioning from neutral to slightly underweight, reducing its appetite to risk to slightly below what they consider par.


The GISG has done this despite their central case expectation that over the forecast period (18 months), owning so-called risk assets (for example equities, commodities and emerging market assets) will be rewarded relative to owning cash or fixed income, and also an acknowledged possibility of a "blue sky" positive scenario for risk assets.

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Global investment outlook

Find out why the GISG has gone slightly defensive despite synchronised global growth.

Rationale - why underweight?


The GISG's view is that both the magnitude of expected returns on risk assets and the certainty of those returns being delivered is falling.


Tactically, a material correction in share markets is overdue in the opinion of the GISG, mainly because of the risks inherent in the withdrawal of monetary stimulus ("transition risk"). This is particularly the case if inflation data forces the pace.


WATCH VIDEO: GISG Chairman's views on transition risk.


This aligns with an awareness that, taking a medium-term view, the GISG must begin the process of becoming more defensive while market conditions are still strong and well ahead of a potential economic peak (in 2019?), which markets may anticipate in 2018.

"Despite these concerns, we retain a sanguine view on equality valuation in the context of synchronising global economic growth and strong profit momentum," says the GISG report.

"We have therefore chosen to make only a small adjustment at this stage which could be reversed if the long-awaited correction arrives sooner rather than later."

Paul Deuchar
Paul Deuchar, Head of Portfolio Management, Investec Wealth & Investment

What history teaches us is that the mistake that most clients make in the event of a crash, is that they tend to panic and exit the market at the worst time.

Alexandra Nortier
Alexandra Nortier, Joint Head of Wealth Management, Investec Wealth & Investment

It is incumbent on us as wealth managers to try and manage clients' emotions throughout the cycles and keep them invested over time.

About the author

Patrick Lawlor

Patrick Lawlor


Patrick writes and edits content for Investec Wealth & Investment, and Corporate and Institutional Banking, including editing the Daily View, Monthly View, and One Magazine - an online publication for Investec's Wealth clients. Patrick was a financial journalist for many years for publications such as Financial Mail, Finweek, and Business Report. He holds a BA and a PDM (Bus.Admin.) both from Wits University.

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