Credit Suisse Group AG, which advises some of the world's wealthiest investors, is recommending that the ultra-rich beef up equity allocations if they've missed out on the bull market so far.
"It's the single-biggest mistake to not have enough equities allocations," said Chief Investment Officer Michael Strobaek in an interview on Friday in Zurich. "If you have participated in the rally you should protect some of your gains but you still need some risk in your portfolio – we are still in a bull market."
Stocks are reacting to a week of political turmoil with investors weighing the prospect of heightened trade protectionism. Before today's gains, the S&P 500 had fallen four straight days and its push beyond 2,800 fell short for a second time in the past month.
Credit Suisse is advising clients to hold 45 per cent in equities, with Strobaek favoring emerging markets, the euro zone and the technology sector. "The worry is we could be missing something in terms of inflation," he said, adding that a sudden rise in prices isn't Credit Suisse's base-case scenario but is a risk. A way to hedge against such a scenario could be allocating money to inflation-linked bonds and the yen, which has emerged as a winner from the escalating trade rhetoric.
Credit Suisse, which is shifting to wealth management as a strategic focus, announced today the consolidation of its so-called house view. Some strategists and analysts from the Global Markets unit and the trading unit in Asia will be joining the international wealth management division that caters to rich clients and also has an asset-management business.