Not investing in developed equities has come at a big cost in 2013 as other assets struggle to compensate, Swiss bank Pictet said during a briefing in London on Wednesday.
According to Pictet, contrary to the years before 2013, having a hyper concentrated portfolio in developed equities was the best choice for investors as it was almost the only asset class with positive returns in the first 9 months of the year.
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"You could not remain on track if you were not on developed equities", said Alexandre Tavazzi, Pictet’s co-head of portfolio management & equity research.
Remaining positive on developed equities on a 9-month horizon, Tavazzi explained that long term rates should also trend up, but at a more moderate pace.
Tavazzi suggested that, heading towards 2014, investors should move away from defensive positions, that is from defensive bond-like equities, because "the next increase in equity allocations should be directed towards value and cyclical segments", and in a more rising bull market volatility.
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