Global cross asset specialist de Pourbaix, who joined the global asset manager in June 2023 from his role as chief investment officer at research house Lonsec, said the firm remains overweight to global equities, specifically those in the US.
Over the past year to 22 April, the S&P 500 is up by 20 per cent and much of this has been driven by technology names such as Nvidia – up 181 per cent over one year – and Meta – up 126 per cent over the same period.
Alongside Tesla, Alphabet, Microsoft, Apple and Amazon, these have been given the moniker of “Magnificent Seven” for their outsize performance.
However, it has led to questions as to whether this outperformance can persist going forward.
“For a diversified portfolio, at an aggregate level, we still remain risk-on in terms of our bias,” he said. “We have a slight overweight to global equities and within that we still favour US equities.
“If we look at valuations, US equities look more expensive than other parts of the market driven by the technology and AI names that we are all familiar with, the Magnificent Seven stocks. While those prices have certainly been elevated, we are still seeing earnings come through from that part of the market which is why we continue to hold that overweight position to US equities.”
Another area he favours is mid-cap global equities as they have an attractive earnings profile.
“From a valuation perspective, global mid-caps are trading at a meaningful discount to US large caps and European large caps, but they are offering an attractive earnings profile, so that mid-cap is an area we are increasingly focused on and allocating to from an asset allocation perspective.”
Moving away from developed markets, de Pourbaix focused on Chinese equities following an aggressive sell-off.
“If we look at parts of the market that look really cheap, Chinese equities are the cornerstone there, and the Chinese market has sold off aggressively. That’s been notably due to poor economic data and weakness in the Chinese consumer which has caused the market to sell off over the past year.
“We are seeing some bottom-up opportunities in that market in companies that have sold off aggressively but that we think have strong balance sheets, are managed by quality teams, and we think earnings will look attractive from a future perspective.”
