ABN AMRO : MeesPierson updates sector weightings

ABN AMRO MeesPierson has made some updates to its sector weightings. ABN AMRO's Dutch private bank has downgraded the overweight position for the information technology sector to equal weight, while at the same time upgrading the utilities sector from underweight to equal weight. Given the cyclical appeal of industry and luxury consumer goods and services, the bank remains overweight there. ABN AMRO MeesPierson stays underweight in the energy, telecommunications and consumer goods sectors.

ABN AMRO MeesPierson's Head of Investment Strategy Ben Steinebach comments, 'The performances of the information technology sector have been improving year by year, and in 2017 business is excellent. Now the valuations have risen a little too far and we're cashing in. It's still our intention to get back on board later, though. We're upgrading our recommendation for the utilities sector, where European and American companies are adopting new business models and are cutting their costs drastically. Consolidations may also lead to improved profits.'

Equities remain a strong favourite

With the global economy improving, ABN AMRO MeesPierson still has a strong preference for equities. The private bank also believes that the valuations have not yet reached extreme levels, since interest rates are low while profits are predicted to grow by double digits and the momentum is favourable. Bonds remain strongly underweight at ABN AMRO MeesPierson. The bank still expects yields to rise, though less rapidly than it originally thought. As the global economy continues to recover and various central banks phase out their policies of quantitative easing, interest rates will rise and cause bond prices to fall.

US loans

Within its bond portfolio, ABN AMRO MeesPierson has added US SME loans as an alternative to cash equivalents: according to the private bank the yields are higher. Steinebach explains, 'Government bonds remain strongly underweight (less than 45% of the overall bond portfolio), reflecting the active duration policy adopted by ABN AMRO MeesPierson. Corporate bonds make up the remainder of our bond portfolio. By predominantly selecting corporates from highly-rated companies that issue euro bonds, we can profit from the ECB's buyback policy.'