What Wellian is also trying to do is “bullet-proof” the portfolios for all eventualities. For example, the Brexit has been a concern so far this year, although the team does not have a house view on the outcome.
At the same time, both Philbin and Mayo stress they do not want to take short-term bets on something that “no one has a full handle on as yet”.
“We have seen there are some risks to the portfolio and there’s risk to yield as well,” says Philbin. “It’s not just about sterling or if our view is positive or negative on [Brexit].”
He adds: “What we want to do is build portfolios that are diversified across different geographies and asset classes so that we can meet the objectives of what we’ve set out in our model portfolios.”
Mayo says: “If you buy a toaster, it’s because you want it to toast bread, you don’t want it to turn into a washing machine. If we have clients with income, high-risk or volatility needs, then we build portfolios for those objectives.
“We’re not going to go out there and be 100% cash one day and 100% global bonds the next; chopping and changing isn’t our style. We try to look through the short-term noise to build portfolios for the medium to longer term.”
That said, within fixed income Wellian’s model portfolios have recently been increasing exposure to funds including M&G Global Dividend, Fundsmith Equity, BlackRock Continental European Income and Henderson Strategic Bond.
Pursuing a buy-and-hold strategy, rather than a “buy-and-forget” strategy, Philbin says the asset allocation team is constantly monitoring holdings, but live by the adage ‘if it ain’t broke, don’t fix it’.
He adds: “We might well be giving up a little bit of performance by having chosen asset A over asset B, but we are aware of the hurdles in terms of time, cost and compliance that need to be jumped for fractional returns – it just doesn’t make sense to us. We’d rather have faith and belief that in the longer term managers can deliver.”
Mayo says: “We are very aware there are funds in our portfolios that in the short term are not delivering, but we have no issue with that at all.
“They are in there because they are part of the team that makes up the portfolio as a whole, rather than being individual components within it.”
