Equities Track Record
We present the performance of our equity asset allocation, which highlights our allocation preferences within the universe of advanced economies. Our portfolio is evaluated against a widely recognised global benchmark to provide clients with clear, real-time insight into the effectiveness of our allocation strategies.
Our specific preferences within G10 equity markets and full details of our equity strategy views are available in our Global Asset Allocation report, available exclusively to clients of Oxford Economics.
Within our G10 equity allocation we use MSCI USD-unhedged total return indices to calculate performance. By using USD-unhedged returns, rather than local currency returns, we ensure that our allocations are actionable for international investors of any base currency.
We evaluate the performance of our overweight allocations against the MSCI global equity USD-unhedged benchmark.
Key Equity Strategy Views
- Equities: Inflation concerns won’t stop the bull market – We remain overweight US equities. Inflation expectation-led rises in discount rates tend to be less pernicious than term premia-led rises for the performance of equities.
- Equities: Quick Take - Buy the good-news dip – Buy the dip. Last Friday's sharp sell-off across the US AI value chain, triggered by a stronger-than-expected May payrolls report, looks fundamentally unjustified to us..
- Equities: The market pricing of AI moats doesn’t add up – We expect AI to be more durable than previous technology buildouts. However, the scale of the rally across the AI value chain raises the question of whether the market has already priced in the growth potential of the beneficiaries of AI too aggressively.
- Equities: Leading indicators imply a beat in US Q1 earnings – US equity earnings expectations have proved resilient since the outbreak of the US/Israel war with Iran, and our leading indicator implies another EPS beat in the Q1 earning season.
- Equities: Positioning for a more challenging macro environment – Equities are likely to remain under pressure as higher oil prices drive inflation and weigh on growth. However, we believe US recession risk remains low, which should cap the extent of further losses, and we still see equities rising over a 12-month horizon.