Barclays optimistic on the big picture

Investors should add to positions in developed equities and high yield credit and cut holdings expensive government bonds, according to Barclays. It added that higher oil prices, or other short-term risk, should not derail the global economic recovery. Barclays head of investment strategy, EMEA, for wealth and investment management, Kevin Gardiner said: “The big picture is unaltered and it is more positive than feared in 2011. Economic growth globally is probably not falling below stall speed; the euro area banks are being cushioned by the ECB; and stock valuations remain on the low side. With this in mind, we are inclined, again, to advise against trying to finetune portfolios in anticipation of shortterm volatility, because to do so might be to run the risk of missing a resumed rally.”

Gardiner added that he recommended slightly larger than usual allocations to developed stock markets and high-yield credit, and smaller than usual weightings in government bonds. If tensions between Israel and Iran escalate, he said oil prices could rise dramatically and said investors should consider allocating to investments which would perform well if the price of oil rises abruptly, such as the oil and gas sector and direct oil exposure.