EMs look attractive post risk aversion of recent months

ON ASSET ALLOCATION

Encouraging noises out of Europe and elsewhere have led us to increase risk tentatively in our growth strategies via a barbell approach.

This translates to buying the US and the emerging markets, which now look attractive post the risk-aversion of the last few months. The recent action by six central banks has been a game-changer in this respect; the US is now at the vanguard of a solution to the European crisis, and both Germany and France have since started to discuss the possibility of fiscal harmonisation. It will not be a smooth ride, but it is the first time in a long time that the politicians look to be on course for a structured solution. In recent weeks, Germany’s Dax has been behaving like a high beta market whi...