The group has remained neutral in all other sectors. However, according to Philip Barleggs, head of asset allocation at Insight, the current economic environment is not favourable for equities as an asset class. “The most defensive market, which is the UK, would fare best in a downturn,” he says. In contrast, Insight is more bearish on the economic outlook for the European and Japanese economies, but says equity valuations in Europe in particular are more attractive than those in the American market. Barleggs expects strong performance from gilts, but has concerns about the corporate bond market as well as the continuing widening of spreads for high-yield and emerging market bonds. As a result of the recent underweight position in the American market, Insight now holds an overweight position in cash. According to Barleggs, the group will be looking for opportunities to invest this cash in the bond market. Similarly, Schroders also currently holds its largest underweight position in American equities. The group has also reduced its total equity exposure to neutral, following a perception of increased market risks, including oil prices and disappointing economic news from America. While Schroders remains modestly overweight in Japan, the group has slightly reduced its exposure to the market because of its sensitivity to high oil prices. Last month, Schroders announced that it was considering reducing its overweight position in emerging markets over the next few months. However, robust profits growth and upwardly revised earnings expectations for the sector have led the group to forecast that emerging markets will outperform other equity markets. The group has also increased its positive outlook for government bonds as it expects demand to rise because of weaker data and an accommodative monetary policy from the Federal Reserve. Schroders’ only other underweight position is currently held in corporate bonds. The sector remains out of favour with the group because of increasing corporate leverage and concerns that widening corporate bond spreads may continue.