The Investment Committee in charge of our Core portfolios met last Friday to review recent market events.
Events surrounding the US/Israeli conflict with Iran have dominated investor thinking in the last couple of months, with equities and the oil price moving in opposite directions as multiple ceasefires began, ended, and began again. With the Strait of Hormuz effectively closed by both Iran and the US, and the sides seemingly a long way apart on their demands to end the war, there remains little clarity on how this situation will resolve. As a result, having made some changes the month before, not long after the conflict began, the committee felt no need to make any major changes this time around.
That said, we sold two of our Absolute Returns (AR) funds, TM Tellworth UK Select and Polar Capital Global Absolute Return, and replaced them with a mixture of Amundi Smart Overnight Return UCITS ETF, Atlantic House Defined Return (which mimics the performance profile of structured notes), and some additional exposure to Amundi Volatility World. By blending the returns profiles of cash, structured notes, and volatility alongside a reduced exposure to pure AR funds, including a new one in Man Credit Opps Alternative, we believe that we can generate a more reliable uncorrelated return at a lower cost.
The changes to our AR exposure freed up some capital within the equity portion of the portfolios, which was used to add to our mainstream global equity holdings, as well as our energy and gold holdings. However, we should be clear that our overall equity exposure remained unchanged, at modestly overweight.
Having made these changes, the committee will continue to monitor developments and make any further adjustments as they become necessary.
