Asset Allocation in focus

Asset Allocation:
A snapshot

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.


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.

 

Fixed Income

UK Government Bonds - Conventional gilts

 

We see the re-emergence of inflation as a topic in the US and think that the same drivers will arise here. We prefer shorter dated index linked for the time being.

UK Corporate Bonds

 

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

UK Government Bonds - Index linked gilts

 

As with conventional gilts, we prefer shorter dated index linked bonds. GBP weakness will only work to boost inflation.

UK Equities

UK Financials

 

The sector could benefit in the short term from the strength of the UK economy.

 

Consumer goods

 

We like this sector for its defensive qualities, but are cautious on following recent strength.

Oil & Gas

 

Given the unfavourable supply/demand dynamics we do not expect any improvement until we see concrete production cuts announced. 

Consumer Services

 

Some interesting opportunities in Media and Leisure exist.

Industrials

 

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

 

Other Equities

US

 

Stock are hitting highs but we are cautious on valuation grounds and slightly weaker economic data.

Europe

 

Upcoming political events and the potential for sterling strength lead us to be cautious here, with the banking sector concerns likely to overshadow the markets. 

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

 

The preference remains property companies rather than open-ended funds, but caution on liquidity. 

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

 

As with absolute return, investors should be cautious when looking for yield and pay close scrutiny to the quality of the investment product.

 

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