Britain’s Bank For The 0.1% Is Bullish

Britain’s Bank For The 0.1% Is Bullish

about 4 years ago2 mins

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The economy and markets are entering a golden patch, according to a report from Coutts, the 327-year-old private bank that manages money for Britain’s ultra-wealthy – including The Queen 👑

What does this mean?

At an exclusive briefing in London on Wednesday attended by Finimize analysts, Coutts’ money managers were excited about rebounding economic indicators and analysts goosing their estimates for company profits.

Citigroup’s global economic surprise index is climbing
Citigroup’s global economic surprise index is climbing

And to position for good times, the bank is shifting clients’ money to riskier assets like stocks and emerging-market bonds. A typical Coutts “balanced portfolio” of roughly 50-50 stocks and bonds now looks more like this:

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Continental European stocks get particular love from Coutts as the region’s export-dependent companies should benefit from a pick up in trade. In their words, “Europe is a leveraged play on the global economic cycle.”

UK equities are also “unloved, undervalued and under-owned” now that “a big part of the Brexit uncertainty is behind us.” The FTSE 250 Index of smaller, UK-focused companies climbed about 10 percentage points more than the FTSE 100 in 2019. And Coutts sees “further potential for the FTSE 250 to outperform” this year.

How Coutts is shifting its equity market allocations
How Coutts is shifting its equity market allocations

Why should I care?

Coutts’ clients are rich. You’ll need well over $1 million to hand before you can open an account (and no, that can’t include the value of your home). And the rich are often more concerned with wealth preservation than wealth creation – which can give their portfolios a conservative bent.

Though, like all of us, they still want returns that are comfortably ahead of inflation. And the cost of luxuries for the wealthy can rise much faster than the dog food and toothbrushes that make up standard inflation measures. Coutts even produces an index tracking the cost of luxuries. The latest reading of 3.7% came in at more than double the official rate of UK inflation.

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