As the markets across the globe are volatile and the near-term outlook for equities is hazy, being a bit overweight cash may be the right move. However, equity as an asset class will play an important role to protect investors against inflation, said Philipp Rickenbacher, CEO, Julius Baer, in an interview with the Economic Times (ET).
"I think that's important and it's okay to be a bit overweight cash. Equities play an important role even though we're a bit underweight. I think equities will play an important role to protect against inflation. It's probably relatively close to real assets when it comes to protection," said Rickenbacher in the ET interview.
Rickenbacher suggested investors must remain invested so that they do not miss out on any recovery that will ultimately come.
“We always tell our clients about the need to be invested. I think the one thing you should not do is just throw everything and go into cash. Because that's the safest way to destroy value in an inflationary era and it's also a way to miss out on any recovery that ultimately will come,” he said.
Rickenbacher further said his recession expectation is a lot milder than what it was about a few months back.
“Our recession expectation is a lot milder than what it was about a few months back. I think the jury's out on what will be the ultimate impact of the current energy situation on the European economy. It's dependent on how fast Europe is really able to reconfigure its supply chains. And then the third honest unknown is how fast will the European economy adapt,” he said.
Disclaimer: This article is based on an ET interview. The views and recommendations given in this article are those of the analyst. These do not represent the views of MintGenie.