Monthly ETF Allocation Ideas - May 2020

Tuesday 12 May 2020

A defensive stance in response to the aftershocks of the Covid 19 earthquake

  • There is a battle between bull and bear forces taking place: On the bull side, extraordinary policy actions continue to propel market sentiment. On the bear side, deteriorating fundamentals will be key risks.
  • Current market uncertainty calls to remain cautious in the short term but be ready to play the sequence of rebound at asset class and regional level.
  • Liquidity has to be managed dynamically: Stay in cash, stay in some risk assets and stay vigilant.

   

Monthly convictions

   

Fixed Income: Constructive on US duration and positive on IG credit

  • We have seen a gradual improvement in market conditions after the massive price and liquidity dislocation in March, but we are not back to normal yet. There is significant discrimination between what is eligible for Central Banks’ programs and what is not.
  • In Global Fixed income, we have a neutral view on duration, with a constructive stance on the US.
        

US Treasuries

Demand for safe haven assets is still supportive for US govies. Unprecedented in scope, Fed’s monetary response to the current crisis is likely to keep US Treasuries yields range-bound despite an increase in future debt. 

  AMUNDI US TREASURY 7-10 UCITS ETF -USD 
 0.14% OGC*

 

  • We remain positive on credit, with a focus on high quality and liquid assets. We prefer IG to HY due to concerns over high default rates and slowing top-line growth.

Euro Investment Grade Corporate

We maintain our constructive view on EUR IG, as it will benefit from the ECB’s liquidity backstop and fiscal package, which will reduce migration and default risk. The sector remains relatively less leveraged than US peers.                                                                                                          

  AMUNDI INDEX EURO AGG CORPORATE SRI - UCITS ETF DR
  0.16% OGC*

  AMUNDI PRIME EURO CORPORATES - UCITS ETF DR
  0.05% OGC*

US Investment Grade Corporate

We are more positive on US IG credit than before. This market segment has been a beneficiary of the Fed’s exceptional stimulus. Importantly, the Covid 19-induced market dislocation has presented long term opportunities across all rating categories, in particular in long maturity IG corporate bonds.

  AMUNDI INDEX US CORP SRI UCITS ETF DR - USD
  0.16% OGC*

  AMUNDI PRIME US CORPORATES UCITS ETF DR – USD  
  0.05% OGC*

 Gold: an efficient hedge to protect portfolios

  • We are still positive on gold and continue to view this asset as an appropriate hedge to limit the impact of market uncertainty and to protect portfolios.
      

Precious Metals: Gold

Gold remains the great winner in the current market turmoil. It benefits simultaneously from economic uncertainty, increasing government deficits and central banks QE purchase programs that provide abundant liquidity in the financial system.

  AMUNDI PHYSICAL GOLD ETC
  0.15% OGC*

  Equity: Balance sheet strength matters now more than ever

  • Equities have recovered partially over the past weeks amid an environment where some countries are thinking of an exit strategy and ways to support a demand recovery.
  • However, the crisis is producing higher than usual uncertainty leading to significant dislocations in some part of the market. This context calls for a defensive stance and a focus on high quality stocks.
          

European Equities

In European equities, dislocations may offer long-term opportunities to enter the market gradually. With still low visibility on corporate earnings and forward guidance, we think it is all about exploring resilient business models, with strong balance sheets.

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

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

  AMUNDI INDEX MSCI EUROPE SRI - UCITS ETF DR
  0.18% OGC*

Read more on Amundi's Resarch Center

*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.
Disclaimers
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 amundi.com or amundietf.com and in the prospectus of the Sub-Funds of the luxembourg Sicav Amundi Index Solutions, mentioned in this document.
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, 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 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, and the latest Global Investment views document which is available on amundietf.com or 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 or sub-funds of the Amundi Index Solutions SICAV (the ≪Funds≫) described in this document may not be authorized for distribution in your country. Before any subscriptions, the potential investor must read the offering 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 amundi.com or amundietf.com or upon request from the headquarters of the Sicav or free of charge from CACEIS Bank, 1-3 place Valhubert 75013 Paris – France, French Paying Agent of the Sicav.
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.
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 creditwo rthiness of the Issuer.
Information reputed exact as of May 2020. 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 office: 90, boulevard Pasteur - 75015 Paris – France - 437 574 452 RCS Paris.
Reproduction prohibited without the written consent of the Management Company. 
Amundi ETF funds and ETC 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.
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 Col lective 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 offices at Kungsträdgårdsgatan 8, SE-106 40 Stockholm, Sweden.