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.
Fixed Income
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UK Government Bonds |
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We see the re-emergence of inflation as a topic in the US and think that the same drivers will arise here. We prefer shorter dated index linked for the time being. |
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UK Corporate Bonds |
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Investment grade bonds with the shortest maturities are preferred, within the constraints of income requirements. |
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UK Indexed Linked Bonds |
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As with Gilts, we prefer shorter dated index linked bonds. GBP weakness will only work to boost inflation. |
UK Equities
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UK Financials |
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The sector could benefit in the short term from the strength of the UK economy.
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Consumer goods |
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We like this sector for its defensive qualities, but are cautious on valuation of overseas earners. |
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Oil & Gas |
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Given the unfavourable supply/demand dynamics we do not expect any improvement until we see concrete production cuts announced. We do think we have seen the bottom in oil prices. |
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Consumer Services |
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Some interesting opportunities in Media and Leisure exist; we are still positive on consumer spending. |
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Industrials |
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Recent strength in the sector could be an opportunity to boost core holdings.
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Other Equities
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US |
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We are now positive on North America thanks to the reflationary political situation and an improved earnings outlook. |
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Europe |
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Upcoming political events and the potential for sterling strength lead us to be cautious here, with the banking sector concerns likely to overshadow the markets. |
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Japan |
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We have little conviction as to Japan’s economic outlook and subsequent policy response. |
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Asia/China |
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There are signs of the economies stabilising but we remain cautious on a potential US rate rise and its effects. |
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Emerging Markets |
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Generally positive on emerging markets but some caution required due to recent strength, coupled with a potential US rate rise. |
Alternatives
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Property |
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The preference is property companies to open-ended funds, but caution on liquidity. |
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Absolute Return |
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Exposure might be appropriate given current market conditions. We suggest caution on the “yield hunt” and are wary of lower quality products. |
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Infrastructure |
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As with absolute return, investors should be cautious when looking for yield and pay close scrutiny to the quality of the investment product. |
