Concerns about huge debt burdens in eurozone economies such as Ireland and to a lesser extent, other parts of the single currency bloc, are encouraging Rothschild Private Banking & Trust to stick to a highly cautious investment stance.

In its monthly investment note for October, the UK private bank said it recommends a large “underweight” position on government bonds, which it considers to be overvalued at current levels. “The long-term outlook is particularly poor, as the fundamentals are shaky and supply is high,” it said.

RPBT went on to say that there are “still pockets of value in investment grade corporate bonds, high yield bonds and emerging market debt.”

More positively, the private bank said prospects for equities are improving, due to “undemanding” valuations and a return to more realistic economic expectations. In the short run, however, RPBT said stocks still look undervalued and as a result, the firm is holding to an underweight position.

Elsewhere, the private bank is overweight hedge funds, arguing that strategies such as long/short equity are attractive in difficult-to-read markets; it is also bullish on gold and continues to “hold significant positions” in the yellow metal.

However, RPBT is underweight other commodities, due to economic uncertainties. It is also bearish on property, concerned that listed real estate funds may struggle.