The Evelyn team expanded its holdings in the CG Dollar Fund, which invests in US Government index-linked bonds, and the Vanguard US Government Bond Index (hedged share class) in the government bonds market.
However, real assets and absolute return funds were two other alternative assets that were decreased.
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The balance within the stock component of the portfolios has also undergone a minor change through the efforts of the team.
While the overall equity allocation stays stable, the managers have reduced their UK exposure in favour of the US.
Additionally, they have also added a new stake in GQG US Equity, a large-cap centred US best ideas fund managed by QGG Partners.
James Burns, lead manager of the Evelyn Partners Core MPS commented: “We continued our theme of recent rebalances of adding to government bonds as expectations have risen that we are at or close to the peak in the interest rate cycle in developed markets. Government bonds remain compelling for as well as offering attractive real yields they should also provide a level of portfolio insurance were a growth shock to occur. Inflation-linked bonds also look interesting as we believe markets may be under-estimating medium-term inflation.
“To make room for these moves we trimmed back the allocation to corporate bonds as credit spreads have continued to tighten to levels that their protection characteristics have become less obvious. Where we retain exposure, it is significantly skewed to short-dated bonds that should fare relatively well in the event of any downturn. Alternative assets, namely absolute return funds and real assets were also reduced as their attraction compared to government bonds fades.
“Although at the index level US equities have been strong this year, this masks the fact that this has been driven by a handful of tech names which have benefitted from hype around Artificial Intelligence. We see scope for this rally to broaden out and have added a new holding in GQG US Equity that should be well placed to capture this theme as well as complementing the existing positions.”
