Current Investment Traffic Lights
November 2024 – Asset Allocation Framework Highlights
Equities Developed Markets
In November, investors withdrew capital from ETFs on European, British, German and Japanese stock indices. The movement of funds stagnated in products on eurozone and Swiss indices. There were exceptionally high inflows into ETFs on US equities and on indices covering global industrialized equities. Japanese equities posted a negative performance in November, while there was little movement in the European, eurozone and Swiss categories. ETFs in all other regions achieved gains. There were no changes in the CIO View.
Equities Emerging Markets
Investors withdrew capital from all ETFs in this category in November. The Chinese equity market stagnated, while the remaining regional ETFs suffered losses. The CIO View remained unchanged in November.
Sovereign Bonds
German and global government bonds made gains in November, while the performance of their US and emerging market counterparts stagnated. Inflows were recorded by ETFs on US and global government bonds, while there were outflows in products on emerging market securities and hardly any movement in ETFs on German government bonds. The CIO outlook for US securities improved from neutral to positive.
Corporate Bonds
There was hardly any movement in prices across all categories. Fresh money flowed into ETFs on US high-yield bonds in November, while there were outflows in the investment-grade category for US corporate bons and ETFs on high-yield European corporate bonds. The CIO view for US high-yield securities improved from negative to neutral.
Commodities
Both gold and the broad basket of commodities recorded losses in November. There were capital outflows in gold products and hardly any movement in ETFs on the broad basket of commodities. The CIO outlook for gold deteriorated from positive to neutral.
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.
Archiv
October 2024 – Asset Allocation Framework Highlights
Equities Developed Markets
: In October, ETFs on the US market and on shares in global industrialized countries in particular saw high inflows. In contrast, ETFs that track the German and UK stock markets saw hardly any movement in funds. Only Japanese stocks recorded an increase in value in October, while all other stock markets stagnated or performed negatively. The CIO outlook changed from negative to neutral for US equities and from positive to neutral for European equities.
Equities Emerging Markets
In October, this category was negative in terms of performance. ETFs on global emerging market equities received high inflows, as did products on Chinese equities.
Sovereign Bonds
ETFs on global government bonds recorded significant inflows in October, while investors withdrew funds from products on US securities. Investors suffered a negative performance in US government bonds and emerging market securities in October, while there was little movement in German and global government bonds. The CIO view changed from neutral to negative for emerging market bonds.
Corporate Bonds
ETFs on US corporate bonds saw high inflows in October, while European counterparts only saw inflows from ETFs that track the high-yield market. In contrast, capital flowed out of products on investment-grade bonds from Europe. US corporate bonds with a good rating recorded a negative performance, while there was little movement in the other categories. The CIO outlook for European investment-grade securities changed from positive to neutral.
Commodities
Investment products based on gold recorded significant outflows in October. The gold price, however, developed positively. In contrast, there was little movement in the prices of the broad basket of commodities. The CIO View remained unchanged in both categories.
September 2024 – Asset Allocation Framework Highlights
Equities Developed Markets
ETFs on broadly diversified indices that track the global, US and European equity markets recorded high inflows in September. In contrast, investors withdrew capital from ETFs on individual equity markets, including Japan, the UK and Germany. The performance of the German and US equity markets was positive in September, while the performance of most other equity markets stagnated.
Equities Emerging Markets
The performance of Chinese, Asian and global emerging market indices was clearly positive in September. High inflows were mainly seen in ETFs on broadly diversified indices.
Sovereign Bonds
ETFs on US Treasuries and global industrialized and emerging market indices recorded significant inflows in September. In contrast, cash flows in ETFs on German government bonds stagnated. Prices moved only slightly in September.
Corporate Bonds
ETFs on both European and US investment-grade corporate bonds recorded high inflows in September. In high-yield corporate bonds, inflows into ETFs for the US bond market stagnated, while their European counterparts recorded inflows. The CIO outlook for US corporate bonds with a investment grade rating changed from negative to neutral.
Commodities
Both investment products on a broad basket of commodities and on gold recorded outflows in September. The development of prices in both categories was clearly positive. The CIO outlook for gold changed from neutral to positive.
August 2024 – Asset Allocation Framework Highlights
Equities Developed Markets
ETFs on US and global equity indices recorded the highest inflows in August. Inflows were also positive for ETFs focussing on the UK and Switzerland. The equity markets in these two countries also recorded the highest price gains last month.
Equities Emerging Markets
ETFs on the Chinese equity market recorded outflows in August, while there was little movement in global and Asian emerging market ETFs. The performance of all emerging market indices stagnated in August.
Sovereign Bonds
All government bond categories saw significant inflows last month, with US government bond ETFs seeing the strongest inflows. Indices on global bond markets and US Treasuries recorded the highest performance.
Corporate Bonds
ETFs on European corporate bonds recorded high inflows, both for bonds investment grade ratings and for high-yield products. The performance of European corporate bonds stagnated. The performance of US counterparts was clearly positive. ETFs on US corporate bonds with investment grade ratings recorded inflows. Investors withdrew capital from the high-yield segment. The CIO outlook for US high-yield bonds changed from neutral to negative.
Commodities
Gold prices rose significantly in August. Listed gold products recorded significant inflows. The CIO outlook for gold changed from positive to neutral. The performance of the broad basket of commodities was clearly negative in August, commodity products recorded outflows.
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.