Tilney’s sustainable MPS has adjusted its portfolio in response to higher inflation, interest rate changes and the impact of the war in Ukraine.
The team has sold the portfolio’s exposure to Lyxor US Tips, an exchange traded fund that tracks the performance of the Bloomberg Barclays US Inflation Linked Bond index, which offers exposure to the US Treasury inflation protected security market.
This has been replaced with cash and short-dated UK Gilts, as well as an increase in short dated investment grade credit and absolute return funds in the more risk averse portfolios.
Tilney’s MPS team has also bought positions in the Schroder Global Sustainable Value fund, added to reduce the heavy growth bias in the portfolios.
The portfolio’s position in Fundsmith Sustainable has been replaced with the Baillie Gifford Responsible Global Equity Income, to take advantage of growing firms that are also paying dividends.
Genevra Banszky von Ambroz, lead manager of Tilney Sustainable MPS, said interest rate and inflation expectations have risen sharply this year, exacerbated by the invasion of Ukraine by Russia at the tail-end of February.
“The ramifications for asset values drove changes across the portfolios, as did efforts to dampen factor and single name risk and improve overall sustainability characteristics.
“By selling the US TIPS exposure in favour of cash and short-dated UK gilts, as well as adding to our short-dated investment grade credit and absolute return funds in the more risk averse portfolios, we have further shortened the duration profile of the portfolios and therefore their sensitivity to interest rate risk.”
Changes to Tilney Sustainable MPS
Lyxor US TIPS
Rathbone Ethical Bond
iShares 1-5 Year Gilt ETF
Brown Sustainable Total Return Bond Fund
Stewart GEM Sustainability
Sold or reduced weighting
|Greencoat UK Wind||Sold|
|Schroder Global Sustainable Value||Purchased|
|Baillie Gifford Responsible Global Equity Income||Purchased|
Cordiant Digital Infrastructure
International Public Partnerships