The Evelyn Partners Active Managed Portfolio Service (MPS) team has initiated a new position in Baillie Gifford Emerging Markets Leading Companies in its highest risk model in its latest-rebalance as it positions for a possible improved market outlook in Asia and Emerging Markets.
In the higher risk half of the range, the team remains underweight Asia and Emerging Markets which have continued to struggle on a relative basis for the past few years, principally due to a deteriorating picture in China. However, the Active MPS team has taken tentative steps for a possible change in fortunes for the sector.
James Burns, lead manager of the Evelyn Partners Active MPS, says:
“It is possible that we are nearing a turning point in Asia and Emerging Markets, but we await evidence of this occurring before making any significant moves here. That said, we have taken some profits from BlackRock Emerging Markets Equity Strategies which has outperformed its benchmark by a huge margin over the past three years thanks to the contrarian stance that has been taken by its managers.
“In the highest risk model, we initiated a new position in the Baillie Gifford Emerging Markets Leading Companies fund which has been managed by Will Sutcliffe since 2009. It is a large-cap focused fund, with a fairly concentrated portfolio and an unashamedly growth style bias, which should benefit from any improved outlook and turn in market sentiment. Technology and financials are currently major themes in the portfolio and the two biggest positions are TSMC, Taiwan’s world leading semi-conductor chip manufacturer, and Samsung Electronics, respectively 9.9% and 9.7% of the fund. In time, when we have greater conviction in Asia and Emerging Markets, we may well bring this fund into more of the models.”
Meanwhile, equity exposure was decreased in the latest re-balance in the two lowest and the highest risk models but increased in the other three, although all moves were marginal. The one area of consistent reduction was to UK equities.
James Burns adds:
“Despite attractive valuations in UK equities, there are greater macro-economic headwinds and less exposure to the growth theme that has been driving markets for the past year or so. However, we retain an overweight to equities in all six models as corporations continue to enjoy strong pricing power as consumer confidence remains robust, labour markets are tight and economic activity remains surprisingly buoyant, especially in the US.”
Please see the re-balance note for full details on the changes made to individual portfolios.
