Over the next few days Julian and the team will be making some tactical investment changes (commonly known as a rebalance) to the Hardy Managed Portfolio range.
What are they doing and why?
In Summary, Julian is adding to Fixed Income following our recent house view decision to increase exposure to this asset class. However, he plans to maintain a small underweight given the uncertain path for inflation and interest rates. At the same time, he is replacing a Corporate Bond fund we currently hold with a higher risk one.
Julian and the team are moving slightly underweight Equities and staying overweight Alternative investments. This move takes advantage of the recent rise in equities and awareness of the ongoing geopolitical risks. This reduction in Equity risk is being somewhat offset by the addition of the new Corporate Bond fund.
Equities: small reduction, primarily through reducing US equities:
- Sell: Healthcare fund on concerns over longer term underperformance and taking advantage of its recent outperformance.
- Buy: a Global Equity fund which invests in quality value companies, current p/e 12x, yield 3%; main overweight positions – Financials, Consumer Defensive and Energy companies
Fixed Income: small increase as above:
- Switch: into a fund which enables us to increase weight and risk. This new fund is a more flexible and punchy Investment Grade fund, focusing on smaller issuers which are often overlooked by the larger corporate bond funds; currently yielding ~10%, which includes ~2% from securities lending.
Alternatives: overall weight unchanged, while:
- Reduce: one of the long-short Absolute Return funds with a focus on Europe, given the increase in European exposure elsewhere in the portfolio and its slightly disappointing performance recently.
- Increase: two of our existing alternative holdings given their lower volatility and more defensive stances.
Hardy Income Portfolios: As with the Growth portfolios, trim Equities to add to Bonds:
- Switch Corporate Bond Funds (as above with the Growth portfolios).
- Add to Gilts rather than Corporate Bonds as we are already increasing risk with addition of the new Corporate Bond fund, and Equities are already overweight relative to Growth portfolios.
- Income target is being comfortably met so don’t feel the need to chase income and increase risk unnecessarily.
Further update will follow post the rebalance.
Important Information
This article is for information only and does not constitute advice or recommendation and you should not make any investment decisions based on it. The views and opinions of this article are those of Casterbridge at the time of writing and may change without notice. Any opinions should not be viewed as indicating any guarantee of return from investments managed by Casterbridge nor as advice of any nature. It is important to remember that past performance and the value of an investment, and any income from it, may go down as well as up and the investor may not get back the original amount invested.
