The coronavirus pandemic is set to lead to the "deepest global recession of the post-war period", according to Aviva Investors, which has boosted allocations to governments bonds, and moved to "a more cautious currency allocation" and an equity underweight position.
In a statement, Aviva Investors said while it is "impossible to forecast" the depth of the economic crisis, a decline in global activity of between 10% and 20% in the first half of 2020 "is plausible".
The firm explained the "unprecedented monetary and fiscal policy response" seen globally "can only cushion the blow" and "there will inevitably be some longer-term impairment".
Explaining the firm's positioning, Aviva Investors head of investment strategy and chief economist Michael Grady said: "We have increased our preference to be overweight government bonds, reflecting our view central banks will continue to act to maintain easy monetary conditions, and at the same time allow fiscal space to be created without higher yields.
"Our modest underweight equity allocation reflects our concern that economic weakness will translate into historically weak corporate earnings in 2020, which we do not think markets are fully discounting at this time.
"We have moved to a more cautious stance in our currency allocation, with a preference to be long Japanese yen and short other Asian currencies.
"We have a neutral view across credit, where corporate bonds spreads have widened sharply, but where there is now significant support from central bank asset purchase programmes."