We believe the bonds highlighted above to be fundamentally attractive in their own right, but they also offer diversification qualities given increased equity weightings across our multi-asset funds.

Currency strategy has changed only moderately over the past several weeks. Of the four majors, sterling is our preferred currency, followed by the US dollar ahead of the euro or yen. While the dollar may well weaken during periods of renewed risk appetite, we are sceptical of many of the bear stories regarding the dollar?s long-term decline against the other majors.

To summarise, the highest level of G7 unemployment for a generation indicates that the world economy remains depressed. However, in forward-looking financial markets what matters is how events turn out relative to what was previously expected. As we have argued all year, the dramatic collapse in risk assets experienced in 2008 scarred investors and led to a collective state of excessive pessimism despite evidence that policymakers were launching the most aggressive policy response in history.

It is clear from the performance of Asian markets that concerns over Chinese growth are fading. But we continue to believe investors largely underestimate the potential for a broader global economic recovery. The rapid reversal of June?s stock market weakness may be the first sign that some trenchant bears are capitulating. It is very plausible that more will follow. This view underpins our positive stance towards equities and other risk assets, although we emphasise also our continued search for cheap, uncorrelated assets as a source of diversified returns.