MARKET PULSE: INVESTMENT COMMITTEE INSIGHTS

Please click on the link below to find our latest Investment Committee Insights

Asset Allocation:

• Rising Yields and expectations of higher inflation have led us to amend our asset allocation as detailed below

Fixed Income

• We have reduced the duration of our bond holdings

• We prefer allocating to cash over low-yielding and volatile bonds

Equities

• Value Vs Growth: Within our allocation to equities, since the end of last year, we have maintained equal exposure between Growth and Value stocks. However, in anticipation of higher yields (which  suggest an environment that could favour Value stocks), we have recently increased the relative allocation to Value stocks. Furthermore, under the scenario of higher inflation, Value stocks tend to outperform Growth stocks

• Taking advantage of market dislocations: We are taking advantage of any market dislocations, e.g. following the collapse of Archegos Capital, we bought the structurally growing company Tencent Music (a stock that we felt was oversold following the collapse in Archegos)

• Event-based investments: Investments that are based on certain events materialising usually tend to show lower correlation with the wider markets. For example, our positions in Veolia, Bayer and Vivendi are trades that we entered due to anticipation of a specific, idiosyncratic event, and thus, these positions could hold-up better, even if wider equity markets were falling.

• Thematic investing – Structural thematic investments like those in Volkswagen (which has a significant programme of investment in electric cars and thus could benefit from the moves towards emission reductions) and BB Biotech (this is a biotech investment fund, and thus could benefit from the need for new and more efficient pharmaceutical solutions) are another way to generate alpha, and these ideas are reflected in our portfolios

Please let us know if you have any questions.