NEW YORK — While world economics might have investors looking to change their global strategies, Heckman Global Advisors LLC, New York, believes the fundamentals haven't really changed and investors should not have to change their strategies.
In the February issue of its All-Country Equity Allocator, Heckman's strategists recommend overweighting the emerging markets and Asia, underweighting Europe and raising the allocation to the United Kingdom, staying in line with their recommendations for January.
The All-Country Equity Allocator employs an allocation model based on quantitative indicators, relative to a benchmark based on the Morgan Stanley Capital International All-Country World index.
Heckman Global advises overweighting emerging markets against the index, although by less than in January, primarily because of Chile's rising real exchange rate and worsening outlook for earnings growth. For Latin America, the All-Country Model weight for February was 2.1%, down from 3.6% in January, against the MSCI All-Country Benchmark Weight of 0.8% for each month.
However, Heckman Global sees emerging markets as still benign.
The model remains underweighted in Europe.
"You'd expect the U.S. to be the engine to pull the global recovery. But we continue to see weakness in Europe," said Brian Gendreau, a strategist with Heckman Global Advisors.
The model's allocation to developed Asia remains above the benchmark.
While its approach to Asia as a whole has stayed consistent in the last several months, the model increased its allocation to Hong Kong, raising its rank to ninth from 10th in January, and decreased its allocation to Japan, decreasing its rank to 24th from 21st in January.
The model remains underweighted in the United Kingdom, although the strategists suggest raising the allocation. According to the newsletter, rising valuations elsewhere mean the U.K.'s largely unchanged valuations now look more attractive.
The model provides country allocation recommendations, evaluating the attractiveness of each equity market, Mr. Gendreau explained. The ranking implements Heckman Global's proprietary mapping algorithm, which is based on value, growth, risk, interest rate and momentum factors.
The recommended country allocation rankings contain a total of 23 developed and 13 emerging markets that Heckman Global has found to be of the most interest to global fund managers.