ABN AMRO Bank N : increases its equity exposure

ABN AMRO has decided to increase its exposure to stocks at the expense of cash, and has now adopted a neutral stance on the asset class. Bonds remain out of favour. In terms of regions, US stocks continue to be overweight (relative to the benchmark) and European stocks underweight, although both have been reduced somewhat. A number of changes have also been made at sector level, where ABN AMRO prefers the healthcare and information technology sectors.

Richard de Groot, Chair of ABN AMRO's Global Investment Committee, commented: 'We base our slightly more positive equities view on three factors. For one thing, stocks are relatively attractive compared with other asset classes. Although we are in a late-cycle environment with moderating earnings growth, valuations are fair, and stocks are relatively attractive compared with bonds or cash. A second factor are persistently low interest rates, which could support equity valuations. The combination of loose monetary policies and low growth can create positive equity returns. And lastly, we expect modest but positive earnings growth on the back of stabilising growth and strong monetary and fiscal stimulus.'

Changes at sector level

As 2019 progresses, ABN AMRO has been suggesting to investors to gradually adopt a more active sector positioning that is geared toward the longer term. The bank now recommends making a few changes at sector level. First off, it has reduced the utilities weighting from neutral to underweight, as it reckons the sector is very sensitive to interest rate increases, as is the consumer staples sector. What's more, stocks in both sectors are expensive relative to their growth potential.

Communication services (down from overweight), industrials (up from underweight) and financials (up from underweight) are neutral now. ABN AMRO prefers the healthcare and information technology sectors as these are typically less dependent on economic trends and can offset demanding valuations.