Asset Allocation in focus

Asset Allocation Focus

As part of our focus on providing a high quality, personalised investment service, we look to support our investment managers in their decision making when it comes to constructing client portfolios. Our asset allocation committee is one example of this, via their monthly output.

Research

As part of our focus on providing a high quality, personalised investment service, we look to support our investment managers in their decision making when it comes to constructing client portfolios. Our asset allocation committee is one example of this, via their monthly output.

The Asset Allocation Committee, which consists of three members of our research team and a number of investment managers, aims to provide a view on the asset allocation that seems most suitable in current macro conditions. The output of the monthly meetings remains a suggested stance and it is important to note, that the views expressed are not those of the firm but rather those of the committee and that the views expressed may not necessarily be those of your individual investment manager.

Here we present a snapshot of the current views.

 

Fixed Income

UK Government Bonds - Conventional gilts

 

Inflation as a threat has re-emerged whilst expectations for rate rises are moderating. 

UK Corporate Bonds

 

Investment grade bonds with the shortest maturities are preferred, within the constraints of income requirements.

UK Government Bonds - Index linked gilts

 

The re-emergence of inflation is supportive but beware higher coupon issues. 


UK Equities
 

UK Financials

 

Opportunities may come from operational gearing due to interest rate rises.

 

Consumer goods

 

We like this sector for its defensive qualities.

Oil & Gas

 

Given the unfavourable supply/demand dynamics we do not expect any improvement.

Consumer Services

 

Some interesting global opportunities exist.

Industrials

 

Selective opportunities still remain in the sector that should benefit from weaker sterling.

 


Other Equities
 

US

 

There is scope for a dollar rally and the potential for support from tax cuts.

Europe

 

Recent re-rating and the strength of the euro suggest caution. 

Japan

 

We have little conviction as to Japan’s economic outlook and subsequent policy response.

Asia/China

 

We see continued evidence of a stabilising China benefiting the region. We will continue to monitor the impact of tighter credit.

Emerging Markets

 

We remain generally positive on emerging markets but some caution required due to recent strength.

Alternatives

Property

 

Our preference remains for property companies rather than open-ended funds.

Absolute Return

 

Exposure might be appropriate given current market conditions. We suggest caution on the “yield hunt” and are wary of lower quality products.

Infrastructure

 

Investors should be cautious when looking for yield and pay close scrutiny to the quality of the investment product and premiums to NAV. 

 

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