For months allocators have been wrestling with the question of whether portfolios need to focus on protecting against recession or inflation.
Parmenion has pinned its colours to the mast, this month deciding the world is in the early stages of recession and adjusting portfolios accordingly.
The DFM's tactical asset allocation committee was unanimous in its view.
Parmenions's view is the market has started to price in a short and shallow recession but they are concerned that, in the UK at least, government and monetary policy could mean a sharper and more prolonged downturn.
With this in mind, they have reduced their UK equity income exposure, and added to sterling corporate bond funds.
Jasper Thornton-Boelman, investment director at Parmenion who we recently had the pleasure of having on our podcast, told Asset Allocator that with sterling investment grade bonds now yielding around 7 per cent, it felt like “an attractive entry point”, even if there was capacity for prices to fall further in the short term.
Higher bond yields have also prompted Parmenion to look again at index-linked bonds, and they have sold out of some of their alternatives exposure to reduce the underweight position they held in linkers.
The investment they have made in linkers has come through the L&G Global Inflation Linked Bond Index fund.
This is by far the most popular linkers fund among the allocators on our database, appearing in eight portfolios - though exposure to linkers remains fairly static in our database at 2.5 per cent.