LONDON (Reuters) – Asset manager BlackRock said on Monday that it reduced its exposure to developed market equities given a worsening economic outlook but upgraded its holdings of investment grade credit.
“The Great Moderation, a period of steady growth and inflation, is over,” BlackRock vice chairman Philipp Hildebrand and his team said in a mid-year outlook for the world’s largest asset manager.
“Instead, we are braving a new world of heightened macro volatility – and higher risk premia for both bonds and equities.”
BlackRock said it was now underweight U.S., European and UK equities while holding onto neutral position in Japanese, Chinese and emerging market stocks.
“Attractive valuations” had prompted the asset manager to upgrade its view on investment grade credit. BlackRock also shifted its view on UK gilts to overweight, making them their preferred nominal government bonds.
“We believe market pricing of the Bank of England’s rate hikes is unrealistically hawkish in light of deteriorating growth.”
(Reporting by Karin Strohecker, editing by Dhara Ranasinghe)
