In its latest re-balance of portfolios, the Evelyn Partners Active Managed Portfolio Service (MPS) team has increased its allocation to fixed income on the back of yields available on both government and corporate bonds continuing to look attractive.
The move came as the team reduced its overweight to equities.
Within fixed income, the team added* to its existing positions such as Vanguard US Government Bond Index (H), Artemis Corporate Bond, Sequoia Economic Infrastructure Income and M&G Emerging Markets Bond.
James Burns, lead manager of the Evelyn Partners Active MPS commented: “This rebalance saw us increase our allocation to fixed income as the yields available on both government and corporate bonds continue to look attractive. Most significantly, the exposure to US government bonds hedged back to sterling was generally increased across the range as we believe that the US is close to a peak in its interest rate cycle. We would expect these bonds to provide good risk-off protection for the portfolios should the macro-economic picture deteriorate.
“The reduction in equities does not reflect a particularly negative outlook, rather an acknowledgement that there is more uncertainty for risk assets and that it was prudent to trim our long-held overweight position. Changes were varied across the range with the only consistent theme being a reduction in the UK exposure.”
The re-balance saw the team introduce three new holdings to the range, as James Burns comments:
- GQG US Equity – “This is a large cap, high conviction strategy with a benchmark agnostic approach and a strong long term track record. It complements our other US holdings well and was added to all but the lowest risk model.”
- INPP – “This is a listed infrastructure investment trust that, due to the movements in bond markets, has seen its discount to net asset value widen significantly in recent months. The dividend yield on offer looks compelling and it was added to the two lowest risk models.”
- Federated Hermes Asia Pacific ex-Japan – “This was brought into the highest risk model to replace two incumbents in whom our conviction had waned.”
