Sarasin & Partners’ Lead Portfolio Manager, Ben Gilbert, spoke to IFA Magazine, detailing his team’s approach to the management of their Model Portfolio Services (MPS).
Sarasin currently offer five diversified portfolios that are targeted at a range of client risk profiles, all of which benefit from a global thematic investment process in addition to using a combination of active funds and low-cost passive solutions.
During this discussion, Gilbert, who is responsible for implementing Sarasin & Partners’ MPS investment policy, highlights the approach to MPS that his team utilise and the tactical changes that they have made to their portfolios during a challenging year.
But how do these decisions help combat the unprecedented inflationary environment faced by asset allocators? Gilbert believes that a process centred on ensuring resilience through turbulence, coupled with responsible stewardship, should dampen portfolio volatility. This stems from Sarasin’s emphasis on “real assets”, which they believe will help “grow income streams over and above inflation”.
IFA: How would you summarise Sarasin’s investment approach with MPS?
Ben Gilbert: “However you come to Sarasin & Partners, whether as a private client, as a charity, as an institution, or for MPS, there are always going to be three things that are at the core of our investment philosophy.
“Firstly, we are global, meaning we look for the best investments around the world, not the best investments that happen to be listed where we reside.
“Secondly, we think thematically. We aim to identify long-term inexorable trends in the global economy that should see us through some of the short-term turbulence and noise that will always be experienced in any market. Sarasin try to invest in areas that are viewed as structural winners whilst avoiding those that are potentially structurally poor.
“The final thing that unites all Sarasin investment solutions is that our role as stewards of our clients’ capital is taken seriously, and we embed responsible stewardship in everything we do.
IFA: Following a difficult year for asset allocators in 2022, what tactical changes have you made to the portfolios as a result of market conditions?
Ben Gilbert: “The last year has shown us the importance of taking a tactical and active approach to asset allocation. It’s been a beneficial tool to help protect clients’ capital during this period.
“We have taken some very active decisions. This year we’ve been very underweight fixed income, and at times during the year we’ve been quite underweight in equities, too.
“Conversely, we’ve been increasing our weightings towards uncorrelated alternatives, together with selected correlated alternatives like infrastructure and we have run higher cash balances this year to act as a dampener on the portfolio’s volatility.
IFA: how are Sarasin’s portfolios positioned to deal with today’s inflationary environment?
Ben Gilbert: “It’s a function of the allocation decisions we’ve been making. We have a strong preference for what we see as real assets – meaning assets that can grow their income streams in real terms over and above inflation.
“That may mean investing in selected equities that can pass cost pressures on to their customers, or get exposure to sectors like infrastructure, where there will often be inflation and index-linked contracts that support investment returns. These are the sort of investments we’ve been favouring and we have been de-emphasising nominal assets where you get a fixed return.
“As inflation increases, it erodes the real value of that fixed return and valuation adjusts accordingly, so we’ve been lowering weightings in nominal assets.
“We’ve had a heightened level of activity in portfolios this year with some rebalancing and shifts in tactical asset allocation. In these markets it’s important to be proactive and nimble – to react quickly to market developments rather than just taking a passive approach and allowing portfolios to rebalance automatically.”
IFA: What kind of risk ratings do the Sarasin MPS funds carry?
Ben Gilbert: “There are five different risk profiles in our portfolios and two different styles – a core style and a responsible and ethical style.
“The portfolios range in neutral equity ratings from 20% up to 100% in equities in 20% increments. We have our own internal risk controls as well as being independently risk-rated by a number of the providers that are most important to the advisors we work with, such as Dynamic Planner, Defaqto, Synaptic, and EValue.”
IFA: Where are Sarasin MPS portfolios available?
Ben Gilbert: “The Sarasin MPS portfolios are exclusively available to advisors via platforms. Owing to demand we’ve been adding platforms all the time, including AJ Bell and Parmenion this year.
“There is are also a wide variety of popular platforms that we’ve been on for a very long period of time, namely, Aegon, Novia, Transact, Old Mutual Quilter, Aviva, ABRDN. As well as this, the Sarasin MPS are available on, Embark, 7IM, Nucleus, M&G, Fundsnetwork.”
Ben Gilbert, Sarasin & Partners’ Lead Portfolio Manager
Ben is primarily responsible for managing portfolios on behalf of UK private clients and Professional Intermediaries. Prior to joining Sarasin in January 2019, Ben was a Director at Tilney, where he worked with private clients as well as sitting on the Asset Allocation and Fund Selection committees.
Ben attended University College London and has a FirstClass Honours degree in History & Philosophy of Sciences. He has passed the Chartered Institute for Securities and Investments (CISI) Masters in Wealth Management, Private Client Investment Advice & Management qualification (PCIAM) and CFA Level 1. Ben is also a Chartered Fellow of the CISI.