This week we have a reason to celebrate, which is the inclusion of a new allocator in our database.
The allocator in question is Marlborough, the fund manager whose offices are tucked away near Ronnie Scott's jazz club in Soho and who quietly launched their MPS proposition in 2022.
We can't speculate about any portfolio manager's nightlife (that's the stuff we keep behind the paywall) but we thought the time was right to get a look beneath the hood of this new entrant.
We had a chat with Raj Manon, Marlborough's head of investment solutions, to get a better understanding of where exactly he is parked.
One of the more idiosyncratic elements of their balanced portfolio is its fondness for Japanese equities, standing at 6 per cent. For context, the average of the DFMs we cover is just 3.5 per cent, so Marlborough sticks out firmly in this regard and gives them one of the biggest exposures to this region in our database.
“Our key overweight position at the moment is Japanese equities. That's a position we've had in the portfolio since Q1 last year and a position that performed well last year for us,” he said.
“Towards the end of that, as we moved into this year, we did ask ourselves a question. When you have had a position that's performed well for you, you automatically question if that has run its course, and whether you should neutralize that position. And we actually think the overweight in Japan still has some way to go. We remain positive on the area and we think valuations remain attractive.”
He added the position is largely comprised of M&G Japan which, if you’ve been getting your Asset Allocator fix lately, is now the most popular Japanese offering within the parameters of our database.
It has delivered top-quartile returns in each of the past three years, which may explain its almost ubiquitous appeal among allocators.
It also probably helps that it's one of the cheapest active funds in the IA Japan sector with an OCF of just 0.53 per cent.
We also covered the opportunities in Japan available to active managers here.
The other quirk in Marlborough’s MPS is its predilection for US equities over any other region. Marlborough parks almost 30 per cent in US funds and underweights the UK and Europe.
Manon sees a broadening out of the US stock market away from the clustered ‘Magnificent Seven’ as 2024 progresses.
“To be fair, they [the ‘Seven’] are magnificent companies, extremely cash generative and profitable. And so we think they'll continue to perform well, but for us, we think that the opportunity will broaden to other areas of the market. We still expect those largest companies to perform but we're just starting to think other areas of the market will also participate more, and maybe even perform a bit better.”
You can read up on the other ways allocators are looking to avoid concentration risk in US equities here.
