James Burns, co-manager of the firm’s managed portfolio service, said he had reduced the portfolio’s position in the iShares FTSE 100 and MAN GLG Undervalued Assets fund, and increased more defensive positions such as the Invesco Perpetual UK Strategic Income fund.
The defensive move comes on the back of fears the long-running upswing for UK stocks will soon come to an end.
Burns has also increased exposure to European equities, swapping into the BlackRock European Dynamic fund from Argonaut European Alpha, following Emmanuel Macron’s victory and the En Marche! success in the French parliamentary election.
Burns said: “With market valuations riding high and many looking relatively expensive, the team is now taking a slightly more defensive stance.
“These decisions were partly influenced by continuing uncertainty over the UK’s Brexit negotiations and the election result which produced a hung parliament in June”.
The bond allocation has also changed with short-dated funds, such as the Invesco Perpetual Tactical Bond, reduced in favour of funds with a more benchmark duration profile such as the Liontrust Monthly Income Bond fund.
Longer duration bonds may provide better protection against a potential downturn in equity markets, Burns added.
Burns’ fears of a market downturn also prompted him to remove the portfolio’s yen hedging, as the yen “typically strengthens” when global markets come under pressure.
