Current Investment Traffic Lights
February 2024 – Asset Allocation Framework Highlights
Equities Developed Markets
There were significant gains in the industrialised country indices in February, while the market barometers for European, British and Swiss equities rose only slightly. As in previous months, ETFs on US equities and global industrialised equity markets recorded high inflows. In contrast, there were outflows in the ETF categories of German and UK equities. The CIO view in industrialised equities category remained unchanged.
Equities Emerging Markets
The indices for global emerging markets and for the Asia ex Japan and China region all recorded price gains in February. Inflows into these ETF categories were also clearly positive. There was no change in the CIO outlook.
Sovereign Bonds
The government bond indices changed little in February. ETFs on US and global government bonds attracted new capital, while there were outflows from products on German and emerging market government bonds. The CIO view in this category remained unchanged.
Corporate Bonds
In February, the performance of all corporate bond indices stagnated. There was inflow of new capital into ETFs in the investment-grade category USA and the high-yield categories USA and Europe. Investors withdrew capital from European investment-grade corporate bond products. There were no changes to the CIO outlook.
Commodities
Both gold products and a broad basket of commodities showed outflows in February. The gold price showed little movement, while the broad basket of commodities lost value. The CIO view remained unchanged.
The concept of the Asset Allocation Traffic Light
Defining and applying the correct asset allocation – that is, the distribution of the various components in a portfolio – can be crucial for a portfolio's returns. Risk diversification can be indispensable, and therefore more important than, the choice of a single correct investment exposure. Many investors now intuitively understand the importance of asset allocation in terms of establishing a risk-diversified portfolio. In this case, the Asset Allocation Traffic Light could serve as an information guide to assist in making future investment decisions. The Asset Allocation Traffic Light provides information at a glance on developments in the main equity, bond and commodity categories. To this end, three analyses are clearly summarised for a total of 29 categories.
Asset Allocation Traffic Light – Threefold information for investment decisions
- According to the CIO View:
The DWS Chief Investment Office (CIO) outlook for the next 1-3 months - How the markets performed in the previous month:
Performance of a representative index for the respective category in the preceding month (e.g. the MSCI World for global equities in developed countries) - What ETF flows were like in the global equity, bond and commodity markets: inflows and outflows in approx. 1,500 ETFs in the European ETF market in the previous month
Questions and answers on the Asset Allocation Traffic Light
What is asset allocation?
Why might asset allocation be important for investors?
According to research the success of an investment can be explained to a large extent by overall asset class price moves, as opposed to the selection of individual securities or market timing (source: William F. Sharpe; Journal of Portfolio Management, 1992). However, there is no right or wrong distribution of assets. Rather, at investment inception it is necessary to assess which risks the investor would like to accept and the period over which funds are to be invested. The asset allocation should be derived from this.
How does the Asset Allocation Traffic Light work?
The Asset Allocation Traffic Light provides information at a glance on developments in the main equity, bond and commodity categories. To this end, three analyses are summarised for a total of 29 categories. First, the performance of a representative index for the respective category over the past month. Second flows in the European ETF market in each segment in the preceding month, and third the CIO View from DWS for the respective investment class, looking ahead to the next 1-3 months.
What do the colours of the Traffic Light mean?
Green means:
- Growth of two per cent or greater in the past month
- ETF flows in the past month: Inflow of EUR 100 million or greater
- CIO View: positive outlook for the category for the next 1-3 months
Yellow means:
- Growth in the previous month: between minus two per cent and plus two per cent
- ETF flows in the past month: between inflow of EUR 100 million and outflow of EUR 100 million
- CIO View: neutral outlook for the category or no substantial price movements expected for the next 1-3 months
Red means:
- Growth in the previous month: minus two per cent or less
- ETF flows in the past month: Outflow of more than EUR 100 million
- CIO View: negative outlook and/or price drop for the category expected for the next 1-3 months
How can the Asset Allocation Traffic Light serve as guidance for future investment decisions?
Do three greens mean "buy" or three reds mean "sell"?
No. A green light only means that the index performance and the ETF inflows in the relevant segment were positive and that the CIO has given a positive assessment.
How can investment decisions be implemented with ETFs?
Legend
Disclaimer
Source: ETF flows: DWS, Bloomberg; Performance: Reuters; CIO View: CIO Office DWS. China equity views are given relative compared to the MSCI Emerging Markets Index. All other equity views are given in relation to the MSCI AC World Index
Without limitation, information contained herein does not constitute an offer, an invitation to offer or a recommendation to enter into any transaction, nor does it constitute investment advice. The CIO View is a document produced for information purposes only and is not intended to be an offer or solicitation, or the basis for any contract to purchase or sell any security, or other instrument, or for Deutsche Bank to enter into or arrange any type of transaction as a consequence of any information contained herein. The information contained herein, inclusive of the CIO View, has been prepared without consideration of the investment needs, objectives or financial circumstances of any investor. Before making an investment decision, investors need to consider whether the investments are appropriate, in light of their particular investment needs, objectives and financial circumstances. When making an investment decision, investors should rely on the final documentation relating to the investment. Further information is available upon investor’s request. The "green" indicator for a category does not mean that DWS recommends an investment in a particular asset class and/or product. The "red" indicator for a category does not mean that DWS advises against an investment in a particular asset class and/or product. Past performance is not a reliable indicator of future results. Forecasts are not a reliable indicator of future results and no guarantee is assumed that forecasts and objectives will actually be fulfilled. Forecasts are based on assumptions, estimates, beliefs and hypothetical models or analyses that may prove to be incorrect. No guarantee can be assumed that investment goals will be achieved or earnings expectations met.
July 2022 – Asset Allocation Framework Highlights
Equities Developed Markets
All developed equity markets performed positively in July, with the highest gains in the US. ETFs focusing on US indices also accounted for the largest inflows. In contrast, ETFs on European equity indices saw outflows predominate in July. The CIO View remains "neutral" for all categories.
Equities Emerging Markets
Fund movements in emerging market equity ETFs were mixed in July. ETFs on Chinese and global indices saw inflows, while ETFs focused on Asia ex-Japan were flat. The Chinese equity market showed negative performance in July, while equity market performance in the other two categories was flat. The CIO View was changed from "positive" to "neutral" for all emerging market categories.
Sovereign Bonds
Inflows into ETFs focused on US, German and global government bond markets were significantly positive in July. Only emerging market government bond ETFs saw significant outflows. A similar picture was seen in performance with significant price gains in German and global government bond markets. The CIO View remains "neutral" for all categories.
Corporate Bonds
European corporate bond ETFs saw significant inflows in July, both in investment grade bonds and high yield bonds. ETFs on US corporate bonds again showed a split picture. ETFs on investment-grade indices showed significant inflows, while ETFs on high-yield indices showed outflows. Performance was clearly positive for all categories. The CIO View rating for the Europe high-yield bond category was changed to "positive".
Commodities
Both gold products and ETFs on a broad commodity basket again showed significant outflows in July. Both indices on the broad commodity market and the gold price showed negative performance. The CIO View for the broad commodity basket remained at "neutral", while that for gold was also changed to "neutral".
Archiv
January 2024 – Asset Allocation Framework Highlights
Equities Developed Markets
Industrialised country indices changed little in January, with only the market barometers for Japanese and eurozone equities rising significantly. As in previous months, ETFs on US equities and global industrialised equity markets recorded high inflows in January. ETFs on German and European equities, on the other hand, showed outflows. The CIO view in this category remained unchanged.
Equities Emerging Markets
In January, indices for global emerging markets and for the Asia ex Japan and China region showed a significant decline in performance. Cash flows into the corresponding ETFs stagnated or were negative in the case of China ETFs. The CIO outlook remained unchanged at "neutral".
Sovereign Bonds
While ETFs on global and US government bonds attracted new capital, inflows into products on German government bonds and emerging market securities stagnated. The performance of all government bond indices stagnated in January. There was no change in the CIO View in this category.
Corporate Bonds
ETFs in the investment grade categories USA as well as Europe recorded inflows, the same was true for the high-yield products of both regions. The performance of all corporate bond indices stagnated in January; there were no changes in the CIO View.
Commodities
There was little change in January in both the gold price and the broad basket of commodities. Listed gold products recorded significant outflows. The CIO outlook for the broad basket was changed to “positive”.
December 2023 – Asset Allocation Framework Highlights
Equities Developed Markets
In December, all industrialised country indices recorded a positive performance, with Japanese equities alone changing little. As in the previous month, most investor capital flowed into ETFs on US equities, while products on European and global industrialised equity markets were also in high demand. ETFs on UK equities, on the other hand, suffered outflows. The CIO view in this category remained unchanged.
Equities Emerging Markets
ETFs on equities from the global emerging markets and the Asia ex Japan region achieved price gains in December. The performance of China equity ETFs stagnated. Investors withdrew capital from these products in December, as well as from ETFs on Asia ex Japan equities. The CIO outlook remained unchanged at "neutral".
Sovereign Bonds
All government bond indices ended December with price gains. While ETFs on emerging market securities attracted new capital, inflows into products on German government bonds stagnated. There were outflows from ETFs on US government bonds. There was no change in the CIO View in this category.
Corporate Bonds
All corporate bond indices also performed well in December. ETFs in the US and European investment grade categories recorded inflows, while there was little movement in the high-yield products of both regions. The CIO view deteriorated from "neutral" to "negative" for both US investment grade and European high yield corporate bonds.
Commodities
There was no major change in the price of gold in December, with investors withdrawing capital from the corresponding ETFs. This was also the case for products based on a broad basket of commodities, which posted a negative performance. The CIO outlook remained "neutral" for both commodity categories.
November 2023 – Asset Allocation Framework Highlights
Equities Developed Markets
All industrialised country indices recorded price gains in November. Most investor capital flowed into ETFs on US equities, while products on global industrialised equities also recorded high inflows. Outflows were recorded by ETFs on Japanese and German stocks. There was no change in the CIO view.
Equities Emerging Markets
There were also price gains in November in the indices for global emerging markets and equities Asia ex Japan. ETFs in the former category recorded inflows, while there were no major movements in funds in products in the latter category. As in the previous month, investors withdrew capital from China ETFs. The CIO outlook remained unchanged at "neutral".
Sovereign Bonds
All government bond indices posted price gains in November. ETF investors channelled their capital primarily into US government bond products. ETFs on emerging market securities also recorded inflows. In contrast, there were outflows from products on German government bonds. The CIO view deteriorated from "positive" to "neutral" for US government bonds and improved from "negative" to "neutral" for emerging market government bonds.
Corporate Bonds
November also proved to be a positive month for corporate bond prices. ETFs on European corporate bonds and investment-grade securities from the USA benefited from significant inflows. The CIO outlook for European high-yield corporate bonds deteriorated from "positive" to "neutral".
Commodities
The price of gold rose in October, but investors withdrew capital from the corresponding ETCs. There were also outflows from products based on a broad basket of commodities. The CIO outlook for both categories remained unchanged at "neutral".
Legend
As of 30.06.2017
Source: ETF flows: Deutsche Bank Research; Performance: Reuters; CIO View: CIO Office Deutsche Asset Management. Emerging Markets equity views are given relative compared to the MSCI Emerging Markets Index. All other equity views are given in relation to the MSCI AC World Index
Without limitation, information contained herein does not constitute an offer, an invitation to offer or a recommendation to enter into any transaction, nor does it constitute investment advice. The CIO View is a document produced for information purposes only and is not intended to be an offer or solicitation, or the basis for any contract to purchase or sell any security, or other instrument, or for Deutsche Bank to enter into or arrange any type of transaction as a consequence of any information contained herein. The information contained herein, inclusive of the CIO View, has been prepared without consideration of the investment needs, objectives or financial circumstances of any investor. Before making an investment decision, investors need to consider whether the investments are appropriate, in light of their particular investment needs, objectives and financial circumstances. When making an investment decision, investors should rely on the final documentation relating to the investment. Further information is available upon investor’s request. The "green" indicator for a category does not mean that Deutsche AM recommends an investment in a particular asset class and/or product. The "red" indicator for a category does not mean that Deutsche AM advises against an investment in a particular asset class and/or product. Past performance is not a reliable indicator of future results. Forecasts are not a reliable indicator of future results and no guarantee is assumed that forecasts and objectives will actually be fulfilled. Forecasts are based on assumptions, estimates, beliefs and hypothetical models or analyses that may prove to be incorrect. No guarantee can be assumed that investment goals will be achieved or earnings expectations met.