Bankinter's Analysis and Markets department changes its investment strategy and 'in a still prudent manner' increases its stock market exposure

This week Bankinter's Analysis and Markets department decided to modify its investment strategy in a step it defines as 'still prudent in an environment that is not without risk'. It has just raised the percentage invested in equities in all the stock and fund portfolios it recommends.

Specifically, Bankinter's Analysis and Markets department has increased its stock market exposure by between 5% and 10% across all of its investor profiles, from the most conservative (classed as 'defensive') to the one with the greatest appetite for equities. For the defensive profile it recommends 5% invested in stock markets (up from 0%), whereas at the opposite end of the spectrum the recommendation for an aggressive profile has risen to 45% versus the previous 40%.

In the conservative profile, where investors have a somewhat higher risk tolerance than in the defensive profile, the recommended equity exposure is 10%, compared with a previous percentage of 0%. In the moderate profile, the recommendation is now 20% instead of 15%, and in the dynamic profile it has reached 30%, up from 25%.

The risk levels for the different investor profiles are therefore as follows:

The recommendations by the Analysis and Markets department refer specifically to financial assets that can be invested in the stock market.

There are basically two reasons behind the decision of Bankinter's Analysis and Markets department to increase the recommended percentage of investment in shares, compared with other assets like fixed income. The first is 'the surprisingly positive business performance' and therefore a smaller-than-expected EPS loss than the universally anticipated '0% to 5%', i.e. moving away from the 5% at the top end of the range.

The second reason is that the lower inflation and interest rate expectations point to a smaller rise in government bond yields. Analysis and Markets estimates a return of 3.5% on the US bond rather than the 4.0% predicted previously.

Both of the above reasons cast stock markets in a favourable light when it comes to making investment decisions, which is why the department has increased the exposure to equities.

In terms of geographical markets, the investment strategy is focused on the US and 'we are taking on some exposure to technology (Nasdaq 100)'.  As mentioned above, this is 'a first prudent step'. The 'next steps will depend on the performance of the macro data, central banks and business results' come September.