We are maintaining our overall outlook – adding some additional resilience to our equities positions in places, and remaining especially vigilant.
OVERSEAS EQUITIES
A range of sectors have seen modest reductions to fund our global equity income positions. Most of the macro focus is on the US, given its significance for monetary policy across the globe but our spread of geographical holdings looks about right.
UK EQUITIES
We are comfortable with our UK exposure relative to other holdings. The recent inflation data has been rather alarming and suggests rates may yet move higher, putting further pressure on the domestic economy, but larger cap names look reasonably well protected and valuations in the smaller space are sufficiently undemanding to keep us involved.
SPECIALIST
We are trimming the (significant) infrastructure holdings in lower and moderate risk portfolios. The growth challenges set to unfold over the next year also see us reduce the global smaller companies allocations in some areas with our large cap, value and defensive exposure receiving a boost from our move to global equity income.
FIXED INCOME
Having added to bond exposure over the last year, we are holding fire for now given the persistence of inflation and pressures from rate rises. The risk of high levels of Government issuance does cause us concern but our US treasuries look credible for now.
PROPERTY
Persistent inflation and rate pressures will continue to challenge the property space. The commercial real estate sector in the US is particularly troubled and we are cautious on the wider space, though significantly lower valuations and niche opportunities mean we are maintaining positions for most.
ALTERNATIVE STRATEGIES
We have a small range of options we like, which bring an extra dimension to portfolios.
CASH
Tactical cash is increased in some areas and levels remain elevated as we wait for better opportunities to emerge.
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Investment Line is written and edited by Chief Investment Officer Simon Gibson and Investment Strategist Richard Smith and is for information purposes. It is not intended to be an invitation to buy, or act upon the comments made, and all/any investment decisions should be taken with advice, given appropriate knowledge of the investor’s circumstances. The value of investments and the income from them can go down as well as up, and you may not get back the amount invested. Past performance is not a guide to future returns.
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