Patrick Thomas, an investment manager at the firm, said the team running its managed portfolio service (MPS) had “selectively put some cash to work” in recent months.
This saw cash fall materially in the firm’s Balanced portfolio, from 13 per cent in the week after the EU referendum to around 8 per cent subsequently.
One beneficiary of this was the First State Indian Subcontinent fund, co-managed by Vinay Agarwal.
“Aside from Indian prime minister Narendra Modi’s structural reform narrative, which we agree with, emerging markets as an asset class becomes more attractive when the growth differential versus developed markets starts to narrow,” Mr Thomas explained.
“India is relatively fully valued but, long term, we think it offers a lot of structural opportunities.”
The manager added that factors exerting pressure on emerging market economies, such as US dollar strength and feeble commodity prices, were now “looking slightly more benign”.
The team has also upped exposure to Richard Woolnough’s M&G Corporate Bond fund, which Mr Thomas described as “a plain vanilla, low-octane investment-grade strategy”.
“While not cheap, there is still a relative attraction in investment-grade credit over gilts and cash,” he said.
Despite the move into emerging markets, the team remains wary of risk. “We have remained cautious in our MPS portfolios and were reluctant to chase what we saw as a speculative rally in risk assets,” he said.
This stance has seen the team stay underweight UK and European equities over concerns about both earnings and dividends – although Mr Thomas stressed this was not related to the Brexit vote or political risk.
At the end of June, the MPS Balanced portfolio was significantly underweight UK equities, holding a 27.6 per cent exposure, compared with the benchmark level of 40 per cent.
The team continues to favour alternatives, particularly “selected themes like infrastructure”, where open-ended vehicles from First State and Lazard are used alongside the HICL Infrastructure and Renewables Infrastructure Group investment trusts.
“While we have not added to any other areas, we continue to like the diversification benefits and low correlation benefits of alternatives,” Mr Thomas said.
“These may be increased in the future.”
At the end of June, the MPS Balanced fund had 13.2 per cent in alternatives, compared with 5 per cent for the benchmark.
This weighting also takes in absolute return funds, including Legg Mason Western Asset Macro Opportunities Bond, Old Mutual Global Equity Absolute Return and Henderson UK Absolute Return. However, Mr Thomas cautioned that he held some doubts about absolute return offerings as a group.