Quilter has trimmed its exposure to US mega caps and added to traditional fixed income in a quarterly rebalance of its WealthSelect managed portfolio service.
Following the AI inspired rally in mega-cap tech names that lifted the Quilter Investors US Equity Growth fund, run by JP Morgan, and iShares North American Equity Index, the firm said it took some profits and rotated into better opportunities.
This included increasing holdings in the Quilter Investors US Equity Small/Mid-Cap fund managed by Schroders, the Quilter Investors North American Equity fund run by Jupiter and the Quilter Investors US Equity Income fund managed by Newton Investment Management.
See also: Weekly outlook: Bank of England interest rates decision and Apple reports
Elsewhere within equities, the allocation to Japan via the Quilter Investors Japanese Equity Fund, managed by M&G, was held in the Managed and Responsible ranges at a higher level than the start of the quarter.
Japan remains a smaller absolute allocation than other developed markets, but is now one of the largest relative overweight positions within the portfolio.
Quilter said the move reflects Japan’s increasing attraction relative to other markets given the potential outperformance derived from corporate reforms, the end of deflation and strong manager conviction.
On the fixed income side of the portfolios Quilter has increased exposure to traditional fixed income through government bonds, with the greater allocation to gilts than global government bonds returning to an equal weighting between the two. This has reduced exposure to cash and alternatives.
The managed portfolios are neutral on fixed income to their strategic asset allocation, but underweight to the peer group. Quilter will build further exposure if yields continue to increase.
See also: NewGAMe and Bruellan call for final deadline on Liontrust’s GAM offer
Stuart Clark, portfolio manager of WealthSelect, said: “The ongoing economic challenges and the continued sell off in government bonds presented a good opportunity to add to our exposure to traditional fixed income, with a particular focus on increasing exposure to gilts and investment grade credit.
“Inflation is not falling as quickly as hoped, particularly in the UK, and as a result central banks have not changed stance as quickly as had previously been expected. The target of the treasured soft landing is akin to landing on a narrow airstrip in the mountains – it will be incredibly hard to achieve and any miscalculation either side could result in significant consequences.
“At a time when there is potential for continued market volatility, fixed income represents a good opportunity for defensive diversification and we have therefore opted to not only add to our exposure in lower risk levels, but also to reintroduce it to risk level 8 for the first time in several years. Going forward, we will keep a close eye on the asset class in anticipation for our next rebalance.”
–
PA EVENT: Autumn Congress, September 27th– 29th | RSVP via email
Hosted at The South lodge Hotel. Transport and accommodation will be provided for the duration of the event.
Our Autumn Congress will serve as a comprehensive platform for discussing the key trends, challenges, and innovations shaping the wealth management landscape. It will bring together thought leaders and industry professionals for enlightening discussions and networking opportunities. Register link |
Sponsors include Alliance Bernstein, Alger, Boston Partners, Baillie Gifford, CCLA, Janus Henderson, GAM, Jupiter AM and much more! Please see the full line-up on our website: AC2023
