Thesis Asset Management has shaved its exposure to UK equities and commercial property across a number of its model portfolios due to fears market uncertainty will persist for some time.
Ryan Paterson, research manager at Thesis, said equities were now at the upper end of their trading range, with valuations generally looking high.
As a result, the company decided it was a good time to trim back its UK equity exposure across six of its seven portfolios, reducing it between 2.3 and 5.3 per cent.
Mr Paterson said the “hangover” from the referendum was yet to be felt, pointing to the expected drop in business investment, and argued the uncertainty in the UK looked set to carry on for a while.
He also pointed to the pitfalls of inflation, which he said would hurt real wage growth and cause a deterioration in household spending, prompting Thesis to reduce exposure to UK consumer activity by selling some retail stocks.
At the same time, the firm decided to slim down weightings to financials, given the lower-yield environment and what it said were ongoing uncertainties surrounding the financial services sector.
Meanwhile, the investment team at Thesis boosted its fixed income exposure after the Bank of England’s base rate cut earlier this month, increasing its weightings in bonds across all of its portfolios.
Mr Paterson said: “The post-referendum relief rally has seen a sharp increase in appetite for risky assets, but perversely risk-off assets have not sold off significantly.”