The global economy continues to grow solidly with an anticipated rally in H2 though the Japan's earthquake, higher oil prices, and fiscal worries in both the US and euro areas have had an impact on many economic indicators, Barclays Wealth – a leading global wealth manager – said Friday. In the latest edition of Compass report, BW said "given our concerns over economic uncertainty and sovereign creditworthiness, we are trimming risk ahead of a very unsettled." Barclays Wealth currently recommends for a moderate risk portfolio a 43 percent allocation to Developed Markets Equities and an 8 percent allocation to Emerging Markets Equities. "However, we continue to recommend a level of risk that is modestly above the neutral level, hence our ongoing stance on developed market equities. In contrast to High Yield bonds, we think the best for stocks is yet to come" said Kevin Gardiner, head of Global Investment Strategy. Barclays Wealth also recommends moving funds from high yield and emerging market bonds into cash, where it is now tactically overweight for the first time in two years. "While we recommend switching from high yield bonds to cash, we view this as a transient move as the low level of interest rates makes this an expensive asset class. We do not expect to want to shelter here for long," Gardiner said. "We also continue to recommend a broadly cyclical sectoral disposition, favoring energy, consumer discretionary and technology sectors ahead of more defensive sectors," he added.
