15 March 2019

Asset Allocation Focus in Spring 2019


Fixed Income

UK Government Bonds - conventional gilts


With inflation risk and possible interest rate hikes later this year we see significant duration risk and would remain short dated.

UK Corporate Bonds


Given the uncertain economic outlook, we see current spreads as offering little value with little downside protection.

UK Government Bonds - Index linked gilts


We have a preference for the protection from inflation afforded by index linked gilts.




We see Chinese stimulus during 2019 as likely. Commodity markets could be a key beneficiary and rally this year. Dividend attractions also support our positive stance.

Consumer Staples 


We like this sector for its defensive qualities, with some valuations now offering buying opportunities.

Consumer Discretionary


Focus on the disrupting companies and high quality brands. Structural growth and rising wages should support the sector. Note Amazon represents 15% of this sector.

Financials – ex Banks, Insurance & Property


This includes a broad range of stocks which are generally geared to investment markets, such as exchanges. Valuations now reflect the cautious lower growth outlook.



Prefer globally exposed banks to domestic, look for beneficiaries of rising rates. 


UK Property


Some discounts in the UK are at historically wide levels however caution on Brexit uncertainty and structural trends impacting High Street.

Life insurance


Supportive demographics, particularly internationally, however the sector is vulnerable to set backs to investment markets.

Health Care 


Growth and defensive attributes and global demographic tailwind. Distinguish between pharma/healthcare/biotech sub sectors. Key theme for medium term.



Valuations starting to look more reasonable following the correction but watch out for value traps eg. low PE cyclicals.



Demand/supply dynamics should become more favourable as year progresses. Dividends sustainable with oil at current levels and valuations appear attractive

Information technology 


Traditional tech firms - Apple, Microsoft (make up 24%) with Visa, Intel, Cisco - be selective.

Communication Services


New restructured sector - Alphabet, Facebook, Netflix, Tencent (make up 30%) included with Verizon, AT&T, Disney and Comcast - be selective.



Valuations now reflecting political uncertainty in UK. UK interest rates unlikley to move considerably from current level. Upgraded to neutral.


Absolute Return


The sector may provide downside protection but this can come with high fees and little transparency.

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.

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