Asset Allocation Focus

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.

Understanding Finance

Helping clients understand what we do is key to building relationships. To explain some of the industry jargon that creeps into our world, we’ve pulled together a section of our site to help.