The world’s largest asset manager, BlackRock, is reducing its exposure to developed markets.
The background to the decision will be that the central banks ‘attempts to contain the markets’ sky-high inflation will continue to create turbulence in the capital markets.
“The long period of steady growth and inflation is over,” said BlackRock deputy Philipp Hildebrand, according to Reuters.
“Instead, we face a new world with increased macro-volatility – and higher risk premiums for both bonds and equities,” he added.
Believes British government bonds are attractively priced
BlackRock is thus underweighted in US, European and British equities, while remaining neutral in Japanese, Chinese and emerging markets.
Furthermore, BlackRock is increasing its portfolio of investment-grade bonds, while at the same time upgrading their view of UK government bonds due to what they consider to be unrealistic hawkish market expectations in relation to interest rate hikes.
BlackRock strategist Wei Li mentions that investors no longer expect both equities and bonds to rise at the same time, as has been the case for the past 20 years.
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