Seven asset allocation themes for 2012

1 Corporate debt: returns should 
be reasonable Corporate spreads rose in 2011 despite improving corporate finances whilst falling yields on government bonds kept returns positive. Corporate spreads should fall in 2012 but government bond yields should rise. Therefore returns from medium and high yield bonds should be good but investors will need to keep duration short for higher quality bonds. 2 Emerging markets currencies and debt are attractive Many currencies reached expensive levels in 2011, heralding a setback for local currency emerging markets debt. We think that setback prov...