Fidelity Worldwide Investments asset allocation director Trevor Greetham has moved to a large moderately overweight position in equities and a heavy overweight in North America.
Greetham says the US is primed for a strong growth and is in the process of decoupling from Europe, which still has many problems to resolve over sovereign debt.
He explains: “The US is decoupling from Europe, as it did in the early nineties, growing at a faster rate. Unemployment in America is dropping and rising in the euro area.”
The portfolio manager for the Fidelity Multi Asset and Multi Asset Allocator funds says US equities are currently outperforming European stocks and this is likely to continue. However, Greetham continues to favour Germany within Europe, but remains underweight towards peripheral Europe.
The asset allocation specialist also holds an overweight position in property and neutral weights on both commodities and cash. He remains underweight bonds, which he thinks will underperform.
The asset allocation director gave the update as a Fidelity survey revealed advisers will recommend equity income, multi-asset and growth equities funds for investors doing the next six months.
The survey of more than 200 advisers also revealed 31.9 per cent would recommend corporate bond funds in the coming six months while just 20.3 per cent would recommend high yield bonds, reflecting Greetham’s caution over the asset class.
Unlike Greeham, however, the managed solutions survey revealed 22 per cent of advisers would recommend the UK as an area for investment in the next six months.
The US was the second most popular area chosen by 18 per cent of advisers, closely followed by emerging markets at 17 per cent and global with 15 per cent.
The Asia-Pacific region gathered 12 per cent of advisers’ recommendations. The least popular area was Japan, with just 2 per cent of investors choosing the country. Concerns over the Chinese slow-down was also reflected in results with just 4 per cent likely to recommend investment to investors.
Greetham says market cycles have become very short as governments attempt to reinvigorate the global economy.
He adds: “Calling cycles is very hard. Diversification across asset classes is the right thing to do in this environment.”