Quilter’s WealthSelect Managed Portfolio Service, the largest MPS in the market, has used its latest quarterly rebalance to top up its allocations to fixed income and alternatives.
Cognisant of current equity valuations and credit spreads against a backdrop of higher barriers to trade and heightened risks to growth and inflation, the WealthSelect portfolio managers – Stuart Clark, Helen Bradshaw and Bethan Dixon – have retained their cautious stance. The team recognises the resilience of markets but believes there are signs that the impacts of President Trump’s tariffs are starting to appear in inflation statistics and risk becoming a headwind to corporate earnings and the expected path of interest rates towards the end of the year.
As such, the team has maintained the overall positioning at the asset allocation level across the WealthSelect range and allowed the portfolios to rebalance back to model weighting via profit taking in the equity allocation, with proceeds being allocated to fixed income, alternatives and cash.
The WealthSelect portfolios have seen a steady increase in fixed income exposure in recent rebalances but have maintained an underweight position versus their strategic asset allocation. This latest increase saw the team add to the Quilter Investors Diversified Bond fund – managed by Premier Miton – across its Managed and Responsible ranges.
Elsewhere, in the Responsible Active and Sustainable Active portfolios, the team added the Aegon Global Sustainable Government Bond fund, which aims to invest in financially strong countries that contribute to the improvements in sustainability targets as defined by the UN Sustainable Development Goals.
Bethan Dixon, portfolio manager at Quilter Investors, said:
“We continue to maintain a steady, long-term approach to investing, with our clients’ goals guiding our decisions, particularly given the noise of late in both the US and Europe. In the current environment, resilience and adaptability are vital, and our portfolios are well placed to support both.
“Given the market backdrop, we retain our cautious stance. Recognising that corporate credit spreads are at all time tights, interest rate uncertainty and increasing political risk being priced into government bond markets, we have directed the top up in fixed income towards the Quilter Investors Diversified Bond fund. The fund is dynamic in terms of its duration and credit positioning, and we believe its approach will continue to add value in the current environment.
“We are also delighted to add the Aegon Global Sustainable Government Bond to the Sustainable portfolios. Achieving positive sustainable outcomes in sovereign fixed income can be challenging given the structural biases in traditional fixed income markets and the more complex nature of sovereign engagement. However, we believe this fund will significantly enhance the positive sustainability outcomes being achieved in this part of the portfolio.”
