Risk assets in favour as recovery is set to continue

ON ASSET ALLOCATION

Quilter's Christopher Beckett reveals his allocation tips as we approach the end of 2010.

We continue to favour equity investments. Valuations remain attractive, on an absolute and relative basis. Strong cash generation is improving the financial strength of many companies and much of this cash will be recycled into equity markets, through acquisitions or share buybacks. Corporate bonds have benefited from improving credit quality but this trend is unlikely to continue as companies become less risk averse and increase their borrowings once again. Credit spreads are likely to remain stable with performance determined by the wider bond market. Western economies continue to s...