Markets in 3D: Delta, Deceleration and Divergences
 
Read online
September 2021
For professional investors only
Photo Header
 
Markets in 3D: Delta, Deceleration and Divergences
Equities have remained buoyant over the past weeks despite some challenges, primarily due to the exceptional earnings seasons in the US and Europe. The emergence and the spread of the Delta variant overlapping with the deceleration in economic growth already in process in the US and China may have opened up opportunities on the investment front. Indeed, we believe that the market has probably moved a bit too far with regard to pricing in the potential lockdowns.

Equities remain the predominant investment area as their valuations versus bonds continue to be favorable.

In Fixed Income, we keep a cautious stance on duration and are constructive on credit, especially in Europe. 

Finally, we maintain a gold exposure to safeguard portfolio & diversify sources of return.
 
Monthly convictions
Source: Amundi. The table represents a cross-asset assessment on a three- to six-month horizon based on views expressed at the most recent global investment committee. The outlook, changes in outlook and opinions on the asset class assessment reflect the expected direction (+/-) and the strength of the conviction (+/++/+++). This assessment is subject to change. BoE = Bank of England, EM/GEM = emerging markets, FX = foreign exchange, FI = fixed income, IG = investment grade, HY = high yield, CBs = central banks, BTP = Italian government bonds, EMBI = EM Bonds Index.
 
EQUITY
Favouring quality and defensive in Europe, long-term positive view on EM Asia
– Equities have been supported by strong earnings relative to history and high expectations, particularly regarding cyclicals. However, we still monitor risks regarding the Delta variant, economic growth and inflation.

– In a short term, it is wise to stay neutral in equities as we expect equity markets to remain sidelined in case of a deterioration of economic conditions due to the virus cycle and the inflation path.
Quality & Defensive European Equities
We recognize that on a valuation basis Europe is more appealing as it has not yet reached its peak in terms of growth and policy actions are still supportive. In this environment, investors should play the rotation favouring quality companies, with a long term earnings potential, attractive valuations and strong pricing power enabling them to pass the increase in input costs to consumers. Nonetheless, in the short term, investors should also be prudent and adopt a defensive stance notably with low volatility approach as the rotation will not be in a straight line.

AMUNDI MSCI EUROPE MINIMUM VOLATILITY FACTOR UCITS ETF - EUR
0.23% OGC*

AMUNDI MSCI EUROPE QUALITY FACTOR UCITS ETF - EUR
0.23% OGC*

AMUNDI INDEX MSCI EUROPE SRI - UCITS ETF DR
0.18% OGC*
EM Asia Equities
We are constructive on India (domestic consumption) where the worst of the Covid crisis is likely now behind us. On China, we retain our long-term positive call and believe that recent weakness has opened up interesting opportunities. Investors could take advantage of the sell-off to increase their allocation to Chinese equity in global portfolios. We see compelling opportunities in China supported by the increasing geopolitical relevance of China globally, its economic power, its emerging middle class and the rising share of China in EM indices. However, we continue to monitor the risks against rising US rates and short term concerns over Chinese growth and regulatory actions.

AMUNDI MSCI EM ASIA UCITS ETF - EUR
0.20% OGC*

AMUNDI INDEX MSCI EM ASIA SRI - UCITS ETF DR
0.25% OGC*
 
FIXED INCOME
Positive on US inflation and constructive on Euro IG with a preference for short maturities
 We are still constructive on credit, especially in Europe as rating upgrades are running ahead of downgrades, but we keep a cautious stance on duration.

UST yields remain at low levels which are not consistent with the economic growth environment, high debt and deficits. We remain cautious on UST and positive on TIPS.
Euro Investment Grade Corporate
The search for income continues. EUR IG corporates remain in a benign environment – ECB remains broadly accommodative providing strong technical backdrop – and act as an engine for returns. Indeed, the credit backdrop is improving amid robust corporate earnings, and stronger metrics and supportive financial conditions. This allows us to remain constructive on EUR IG, where we prefer shorter duration debt.

AMUNDI EURO CORP 0-1Y ESG - UCITS ETF DR
0.08% OGC*

AMUNDI INDEX EURO CORPORATE SRI 0-3 Y - UCITS ETF DR
0.12% OGC*

AMUNDI PRIME EURO CORPORATES - UCITS ETF DR
0.05% OGC*
US Inflation
With levels above 5%, inflation continued to be a key topic in August as investors still weighed the impact of the spreading Delta Covid-19 variant onupbeat forecasts globally. Whilst the Fed continues to see high levels of inflation as likely to be temporary, we believe inflation is going to be higher than expected. In this context, we maintain our positive view on TIPS as they continue to offer decent inflation adjusted yields.

AMUNDI INDEX BARCLAYS US GOV INFLATION-LINKED BOND - UCITS ETF DR - USD
0.09% OGC*
 
COMMODITY
Gold as portfolio diversifier amid an inflationary environment
 We believe investors should protect portfolios against inflation and assets such as gold can help with that. In addition, in times of rising volatility and some mild deterioration in sentiment, gold can act as a strong diversifier of portfolios.
Precious metals: Gold
We think both the scenarios of rising inflation (gold acts as a hedge against inflation) or a slowdown in growth (recent US and China slowdown provided impetus to gold pricing) should be supportive of gold prices. Gold also serves as a good portfolio diversifier and a safe-haven asset in uncertain and riskier environments.
However, investors should monitor Fed comments and real rates for potential pressures on the metal.
 
0.15% TER**
 
Contact us Visit our website Follow us on Twitter Follow us on LinkedIn
 

*Ongoing charges - annual, all taxes included. For Amundi ETF funds, the ongoing charges correspond to the Total Expense Ratio. The ongoing charges represent the charges taken from the fund over a year. When the fund has not closed its accounts for the first time, the ongoing charges are estimated. It compares the annual total management and operating costs (all taxes included) charged to a fund against the value of that fund’s assets. Transaction cost and commissions may occur when trading ETFs.
**The TER is a measure that compares the annual total management and operating costs (all taxes included) charged to a ETC against the value of that ETC’s assets. Transaction cost and commissions may occur when trading ETCs.

Disclaimer
This material is solely for the attention of professional and eligible counterparties, as defined in Directive MIF 2014/65/UE of the European Parliament acting solely and exclusively on their own account, or Institutionals, and acting exclusively on their own account. In Switzerland, it is solely for the attention of qualified investors within the meaning of Article 10 paragraph 3 a), b), c) and d) of the Federal Act on Collective Investment Scheme of June 23, 2006. This document is not intended for citizens or residents of the United States of America or to any «U.S. Person», as this term is defined in SEC Regulation S under the U.S. Securities Act of 1933. The US person definition is indicated in the legal mentions section on www.amundi.com, or www.amundietf.com, and in the prospectus of the Funds as defined below.
Promotional and non-contractual information, which should not be regarded as an investment advice or an investment recommendation, a solicitation of an investment, an offer or a purchase.
Since this certain information contained in this document may be analysed as an investment recommendation, it is explicitly stated that this document has not been prepared by reference to the regulatory requirements that seek to promote independent financial analysis. Accordingly, Amundi AM, in its capacity as investment service provider, remains free to carry out transactions in respect of the financial instruments referred to in this document. Amundi AM accepts no liability, whether direct or indirect, that may result from using any information contained in this document or from any decision taken the basis of the information contained in this document.
This material contains a selection of strategies and investment scenarios that reflect only the opinion of the Amundi Research and Strategy team. Their last publications are available on amundietf.com or www.research-center.amundi.com.
Amundi does not accept any liability, responsibility or duty of care, whatsoever, with respect to the information or its any use. Amundi does not give any guarantee (whether express or implied), warranty, undertaking or representation as to the accuracy, validity, relevance, exhaustiveness, timeliness, completeness and/or reliability of the information.
The opinions expressed reflect the current judgement of Amundi investment personnel and may be subject to change without notice. Amundi shall be under no obligation to update the information. It is based on sources considered as reliable and may change without prior notice. It is inevitably partial, provided based on market data stated at a particular moment.
Some of the funds domiciled in France (“French Funds”) and/or sub-funds of the Amundi Index Solutions SICAV (together the “Funds”) described in this document may not be authorized for distribution in your country. Before any subscriptions, the potential investor must read the regulatory documents of the Funds approved by the Autorité des Marchés Financiers for French Funds or by the Commission de Surveillance du Secteur Financier of Luxembourg for the sub-funds of the Luxembourg Sicav Amundi Index Solutions, including the KIID, available on www.amundi.com or www.amundietf.com. Investment in a Fund carries a substantial degree of risk (i.e. risks are detailed in the DICI and prospectus). Transaction cost and commissions may occur when trading ETFs. The policy regarding portfolio transparency and information on the funds’ assets are available on amundietf.com. The Funds offer no capital protection.
Amundi ETF funds are neither sponsored, approved nor sold by the index providers. The index providers do not make any declaration as to the suitability of any investment. A full description of the indices is available from the providers.
AMUNDI PHYSICAL GOLD ETC (the “ETC”) is a series of debt securities governed by Irish Law and issued by Amundi Physical Metals plc, a dedicated Irish vehicle (the “Issuer”). The Base Prospectus, and supplement to the Base Prospectus, of the ETC has been approved by the Central Bank of Ireland (the “Central Bank”), as competent authority under the Prospectus Directive. Pursuant to the Directive Prospective Regulation, the ETC is described in a Key Information Document (KID), final terms and Base Prospectus (hereafter the Legal Documentation). The ETC KID must be made available to potential subscribers prior to subscription. The Legal Documentation can be obtained from Amundi on request. The distribution of this document and the offering or sale of the ETC Securities in certain jurisdictions may be restricted by law. For a description of certain restrictions on the distribution of this document, please refer to the Base Prospectus. The investors are exposed to the creditworthiness of the Issuer.
Information reputed exact as of September 2021. Amundi ETF designates the ETF business of Amundi Asset Management. Amundi Asset Management, French “Société par Actions Simplifiée”- SAS with capital of 1 086 262 605 euros - Portfolio Management Company approved by the AMF under number GP 04000036 - Registered offce: 90, boulevard Pasteur - 75015 Paris – France - 437 574 452 RCS Paris. Reproduction prohibited without the written consent of the Management Company.
France: Some information may constitute a general investment recommendation as defined in the article 313-208 of the Réglement Général de l’AMF. This material has not been produced in conformity with regulatory provisions aiming to promote the independency of financial analysis, and Amundi Asset Management, as an investment services provider, has no restriction in negotiating any financial instruments described in this material before its issue. Des seuils de réservation sont fixés en appliquant un pourcentage de variation de la part, indiqué dans le prospectus du Fonds mentionné dans ce Document et d’autre de la Valeur Liquidative Indicative ou « VLi » de ce Fonds, publié par Euronext Paris SA et actualisée de manière estimative en cours de séance en fonction de la variation de l’indice de chacun des Fonds indiqués dans ce Document; Le Teneur de Marché s’assure que le cours de bourse des parts du Fonds ne s’écarte pas plus du pourcentage indiqué dans le prospectus du Fonds mentionné dans ce Document et d’autre de la valeur liquidative de l’OPCVM, afin de respecter les seuils de réservation fixés par Euronext Paris SA.
United Kingdom: This document is being issued inside the United Kingdom by Amundi Asset Management which is authorised by the AMF under number GP04000036 and subject to limited regulation by the Financial Conduct Authority for the conduct of investment business in the UK under number 401883 with its registered offce at 77 Coleman Street, London EC2R 5BJ. Details about the extent of our regulation by the Financial Conduct Authority are available from us on request All products mentionned ion this document are recognized collective investment schemes for the purposes of the Financial Services and Markets Act 2000 of the United Kingdom (the “Act”). This document is only directed at persons who are professional clients or eligible counterparties for the purposes of the FCA’s Conduct of Business Sourcebook. The investments described herein are only available to such persons and this document must not be relied or acted upon by any other persons. This document may not be distributed to any person other than the person to whom it is addressed without the express prior consent of Amundi.
Germany: Die Verkaufsunterlagen der in Deutschland zum öffentlichen Vertrieb registrierten Amundi ETFs sind auf Anfrage kostenlos und als Druckstücke bei Marcard, Stein & Co. AG, Ballindamm 36, 20095 Hamburg, Deutschland, erhältlich. Bei den Fonds handelt es sich um Organismen für gemeinsame Anlagen, die von der AMF zugelassen sind.
Spain: This material is intended solely to institutional investors , professional, qualified or sophisticated and to distributors. Amundi Iberia SGIIC, SAU, principal distributor, supervised by the CNMV and registered with the No. 31, with address at Paseo de la Castellana nº 1, 28046 Madrid. The legal documentation of the Funds is also available on www.amundi.com.
Switzerland: Amundi ETF Funds available for distribution to all investors: This AMUNDI ETF Fund has been authorized for distribution to non-qualified investors in or from Switzerland by the Swiss Financial Market Supervisory Authority (“FINMA”). Subscriptions in the ETF Fund will only be accepted on the Fund’s the Key Investor Information Document (“KIID”) and the prospectus, or the fund’s regulation as well as the annual and semi-annual financial reports that may be obtained free of charge from the Swiss Representative. Swiss Representative: CACEIS (Switzerland) SA - Route de Signy 35 - CH1260 Nyon. Paying Agent in Switzerland: CACEIS Bank, Paris, Nyon branch / Switzerland - Route de Signy 35 – CH- 1260 Nyon. Amundi ETF Funds aimed at qualified investors only: This Amundi ETF Fund (collective investment schemes) authorized by the AMF, has not been approved by FINMA. This Amundi ETF Fund is available in Switzerland for distribution exclusively to Qualified Investors, as defined in the Collective Investment Schemes Act of 23 June 2006, as amended (“CISA”) and its implementing ordinance. The KIID, prospectus, fund’s regulation and annual and/or semi-annual financial reports relating to this Amundi ETF Fund are available free of charge from the Swiss Representative or from authorised distributors to Qualified Investors. Swiss Representative: CACEIS (Switzerland) SA - route de Signy 35 – CH 1260 Nyon. Paying Agent in Switzerland: CACEIS Bank, Paris, Nyon branch / Switzerland - Route de Signy 35 – CH- 1260 Nyon.
Sweden: The funds have been passported into Sweden pursuant to the Swedish Securities Funds Act (as amended) (Sw. lag (2004:46) om värdepappersfonder), implementing the UCITS IV Directive and may accordingly be distributed to Swedish investors. The Key Investor Information Document (“KIID”) (in Swedish) and the prospectuses for the funds, as well as the annual and semi-annual reports are also available from the Swedish paying agent free of charge. The name and details of the Swedish paying agent are: SKANDINAVISKA ENSKILDA BANKEN AB (publ) through its entity Transaction Banking, SEB Merchant Banking, with its principal offces at Kungsträdgårdsgatan 8, SE-106 40 Stockholm, Sweden.
Austria: The sales documentation of the Sub-Funds registered for public marketing in Germany are available free of charge and as printed copies at MEINL BANK AG an Austrian Bank with its registered offce at Bauernmarkt 2, 1014 Wien, Austria, represented by Mr Robert Kelfer and Mr Peter Grandl as Director of Meinl Bank A.G. and Director of Meinl Bank A.G.
We have updated our Privacy Policy and Cookie Policy. We encourage you to review the full Privacy Policy here. If you have any questions about these changes, please reach out to us using the contact information provided in the privacy policy.
If you do not wish to receive further information from Amundi, please use the "Unsubscribe" link below.

Unsubscribe