The Investment Committee in charge of our Gaia 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 added 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 alongside our existing holding in Trojan Ethical. By blending the returns profiles of cash, structured notes, and volatility with the Trojan fund, which is a pure AR fund, we believe that we can generate a more reliable uncorrelated return at a lower cost. This move was funded by a reduction in our Fixed Interest exposure, which appealed when bonds feel somewhat vulnerable to the inflation shock that could come if the conflict proves to be prolonged.
Our overall equity exposure remained unchanged, at modestly overweight. However, we did replace Morgan Stanley Global Quality Select with HC Resolution Global Equity. The former has struggled recently, as quality as a style has fallen out of favour in a world potentially disrupted by AI. In addition, we have been concerned by some inconsistencies of approach from the managers. As the Resolution fund offered a strong alternative, the committee felt that a change was warranted.
Having made these changes, the committee will continue to monitor developments and make any further adjustments as they become necessary.
